Author: Leigh Jobling, Partner, TAG Financial Services
While low interest rates are a tool to stimulate the economy when things are slow and the outlook questionable (monetary policy), the one benefit that cannot be questioned is the savings for those with a loan.
Variable home loan interest rates are around 2.8%. Believe it or not, you can get a 3 year fixed rate for about 2.2%. These rates are never-before-seen and represent a huge opportunity.
Consider a $400,000 home loan with a 3.3% interest rate refinanced with a new low rate of 2.8%. Payment are principal and interest, monthly, over 25 years.
The lower rate saves the borrower nearly $32,000 interest over the life of the loan. If those monthly savings ($104 per month) were put back into the loan and repayments changed from monthly to fortnightly ($852 per fortnight), the savings increase to over $45,000 and the loan is repay 2 years sooner.
Over the last 2 years we have secured several clients savings of $100,000 ($4,000 – $5,000 per year) over the life of their loan.
For those whose employment income or business performance has not been significantly impacted by COVID-19, now is a great time to re-finance your home, investment or business loan.
While house prices have flattened we would encourage you to seize the moment as re-financing is best done when valuations are more attractive and house prices may fall over the coming 12 months.
Don’t hesitate – now is the time to secure a great rate. Competition is fierce and the banks are hungry for your business which gives you the competitive advantage!! One things is for sure, your bank won’t approach you and offer their best rate.
If you have any questions or would like a Loan Review, contact TAG Finance & Loans by calling 03 9886 0800 or emailing firstname.lastname@example.org.
Disclaimer: The information contained on this page is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). TAG Finance and Loans Pty Ltd ABN 25 609 906 863 Credit Representative Number 483873 National Mortgage Brokers Pty Ltd ABN 88 093 874 376 Australian Credit License 391209