For many of us, a house is the beginning of a family. You buy your dream home, have kids and upgrade your hatchback to a practical Volvo.
You enjoy family holidays, be it to the local caravan park or to the whitest beach in the Maldives - or perhaps somewhere in between.
All the while you’re making mortgage repayments as you go. The point is, life ticks along and as it ticks, you don’t stop to question what you’re doing.
When it comes to home loans however, you probably should. Research has shown that over one third of Australians with a mortgage have never refinanced their home loan.
But why should you bother refinancing if you’re making your repayments relatively comfortably? Here’s why:
RBA rates have dropped over the past ten years by almost 5 per cent, from 6.25 in 2007 to 1.5 per cent as of last month.
So regardless of whether you’re making those payments easily, or worrying about making ends meet month to month, there’s a good chance you could be on a higher than necessary rate if you haven’t taken action on your loan for the past 5-10 years.
It’s worth making the most of the rates whilst they’re low in order to reduce the length and size of your home loan repayments - and this is how:
- As a homeowner, you should act now to take advantage of the increased competition amongst banks and financial intuitions who are competing heavily for your business with generous introductory rates.
- Switching to an interest rate even just a few basis points lower can not only reduce repayments but also shave years off your loan.
- If you are a homeowner who is currently paying off a car, school fees or other major expenses you might want to look into saving money on repayments by consolidating all your debts into one loan.
- When the RBA makes changes to interest rates, this is a good reminder to review your options and consult a home loan expert. They will be able to talk you through all the financial jargon and find out what rate, plan and features best suit your lifestyle and budget best.
With those tips in hand, you are now in a position to reassess your home loan and hopefully make some savings - whether it's allowed you to ease the monthly stress on repayments, or make space in the budget for a revisit (or first visit) to the whitest beaches in the Maldives!
Laura Crowden works for life admin experts iSelect. When she isn't providing advice on how to find the right energy, broadband or insurance plan, Laura can be found tackling home renovations (to varying degrees of success) or eating ice cream. She loves getting a good deal, sparkly things, her cat & G&Ts.
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