What's happening with interest rates? You may have read in the press recently that banks are competitive and are offering discounted interest rates. While this is true, this is really nothing new, banks are always looking for ways to keep your business and gain new clients.
If you are currently on a fixed rate, in my opinion there is very little value in asking your lender to break your fixed contract and switch you to a lower rate, becuase they'll simply ask you to pay the interest on the rest of your fixed contract in advance ( early break fee) before switching you to the lower rate.
If you are on a floating rate you may like to consider whether now is the right time to swtich to a fixed rate, but it depends on your strategy, in other words, reviewing why you are on a floating rate currently.
In either case, the actual interest rate you are curently paying should be a relatively small part of your overall borrowing strategy. For example if you have a $200,000 mortgage and your interest rate drops from 6% to 5.5% this will save you approx $1,000 per annum or approx $20,340 over 20 yrs but if you remained on 6% and increased your repayments by $53 per week this would reduce the term of the mortgage by 10 years and result in additional principal repayments of $52,000 over the same period.
Unforunately the media have jumped on this issue and arguably given it more attention than it deserves. However at least it is providing the trigger for people to think about their mortgage and this is a good thing. If it is causing you to think about your mortgage and you want to review your strategy or help with making some changes, give me a call to discuss
No comments:
Post a Comment