INTEREST RATES & MORTGAGE REPAYMENTS

At last interest rates are dropping, after a period of high interest rates and the cost of living increasing.

This is a welcome relief for all home owners and property investors, with many now having fixed rates expiring and looking for a better deal.

Whilst the OCR has seen a steady reduction this will not continue forever, and we are expecting this to flatten out going forward. A large number of homeowners are “sitting on the fence” to see what happens and opting for shorter term fixed rates with some splitting their home loan into 6 and 12 month fixed rate terms. The lower interest rates do give you the option to reduce your repayments to give you more cash to meet normal day to day living costs, as times have been tough.

We are seeing some clients decide to keep their repayments at the higher level, if they can afford it, to pay their home loan off faster. Another option is to use this as an opportunity to refinance and consolidate debts that have accumulated, car loans, credit cards, HP and in some cases IRD tax arrears.

Whilst you can do this with you current Bank, there are many who are asking us to look at other Banks to see what they offer. In many cases there is a generous cash incentive paid out by a new Bank which will cover legal fees plus put some cash in your pocket. The Bank will have a clawback period though, so you can’t do this every 12 months!, We always check what the clawback period and rules are to ensure you don’t get caught out.

Best advice is to talk to a financial adviser before you do anything, as you do not want to get hit with an unexpected penalty for breaking your home loan before the expiry of the fixed rate term.

Why don’t you contact us and we can discuss what some options are for you to take advantage of the current lower interst rates?