Smart thinking on loan repayments

Apr 30th, 2015

Smart thinking on loan repayments

Apr 30th, 2015

While we are currently securing clients lower interest rates, we are advising them to keep their repayments at the same level.

We’ve got clients who we’ve refinanced with lower rates whose monthly repayments are now around $500 less, but we are saying if you can keep putting that extra money into your home loan you will be at a considerable advantage.

If you’ve been managing your monthly repayment as part of your regular budgeting, don’t just secure a lower interest rate and pay less…… secure a lower interest rate and keep paying the same.

You can get ahead of schedule so you’re well-placed when rates start going up.

You’ll also be closer to paying off your home loan.  Plus making bigger-than-necessary repayments reduces the term of a loan and therefore brings interest savings. For example, the total cost of a $500,000 loan being paid back in 28 years is $32,000 lower than taking 30 years to pay out the loan.

Current Australian data shows it is not just the cashed-up who are wiping off their home loan debt. Across the nation, we have made the most of super low interest rates to surge $212 billion in front on repayments – an extra $26 billion compared to just two years ago.

How much you will be able to pay in addition to your minimum repayments will depend on your loan set-up….. with variable rates you can pay as much as you like back, but fixed rates will only allow a certain amount to be paid off additionally without incurring a penalty from the bank.

We can work through the best scenarios with you. Call Home Loans & Finance Group on 8362 1377 for an appointment.