INTEREST RATES & MORTGAGE REPAYMENTS
What To Do When Home Loan Interest Rates Are Increasing
Yes, that is a huge amount of money, in fact a very reasonable annual wage. This was calculated as an example on a $500,000 Home Loan repayable over 30 years, at 5.35% pa you would pay back a total of $1,005,145 and at 4.85% $949,845, a difference in repayments of $55,300. This is interest you have saved and money kept in your bank account!
This highlights the importance of managing your fixed and floating rates, what is the best interest rate option for you? Floating rates are often higher than fixed, so it makes sense to fix for a term, as this gives you the opportunity to either focus on debt reduction by paying more, or reducing repayments to free up more cash for day to day costs. With a new Home Loan we can request the Bank for their best discounted rates for floating, 1,2,3,4 and 5 year fixed terms and then discuss how this will best work with your personal situation. We will then record the expiry date and structure, so we can assist you manage future fixed rate expiry dates.
If you are checking out the best interest rates online, as you have always dealt with your Bank direct in the past, you can discuss with us what options exist. We have often even approached a client’s existing bank and obtained a better interest rate than they were offered or, suggested an alternative structure by splitting their loan into say a 1 and 3 year fixed term to better manage risk. Many Banks offer online opportunities to fix rates, we believe you should also discuss your goals at this time, are you looking to pay your home loan off faster, are you thinking of selling, would a portion on a flexi facility help you make lump sum reductions?
So, if you want some help with your floating and fixed interest rates, we are only a phone call or email away, you can also visit us at our Orewa office to discuss over a coffee. Just 15 minutes could be your first step towards saving $55,300!