The RBA’s decision to leave interest rates steady at 2.50 per cent p.a. was fantastic news for investors and home loan borrowers alike; better yet are the predictions of a stable interest rate environment for the remainder of the year. So what options are available when it comes to choosing or refinancing your mortgage?
Homeowners have had a steady ride lately and with the last interest rate change in August 2013. With this sustained period of stability brings the opportunity to reboot your home loan’s saving potential where rates are concerned.
Steady interest rates create the perfect environment to test the features and flexibility of your mortgage. Options, such as splitting your rate, can really make a difference to the overall amount you payback.
Split loans – also called combination rate loans – combine the advantages of variable and fixed interest rates into a single loan. The key to split loans is flexibility – you can decide what portion of the loan is fixed or variable to suit your needs and current market conditions. Just remember that the fixed proportion of the loan will be locked in for a set time frame – usually one to five years – and there may be break costs if the loan is repaid early.
With steady interest rates for the foreseeable future, now could be the time to make your move and select a higher variable rate component on your mortgage: for example: 65 per cent variable, 35 per cent fixed.
Most banks and lending institutions offer fixed and variable rate loan packages – so call your mortgage broker to discuss ways to maximise the different loan features.
Key home loan considerations:
Why select a split product? Split loans are versatile and can be used for investment and owner-occupied property purposes. Through splitting your loan you get the best of both worlds – the security of a fixed interest rate coupled with the flexibility of a variable rate loan.
Take advantage of variable rates. Higher variable rate loans are suitable for times of economic certainty and unchanged interest rates. This gives you the opportunity to make additional payments to your variable rate home loan to suit your needs.The goal? Paying off your overall loan faster!