You probably don’t realise it just yet, but we’ve never had it this good. When it comes to interest rates that is.
This morning on my way to work, an advert on the radio caught my attention. Mortgages being offered at a staggering 3.55%. It got me thinking, is this a good thing or a bad thing? It’s both. And here’s why.
When I first purchased my home I used to always look forward to the first Tuesday of every month. That’s the day the Reserve Bank of Australia reviews the countries Monetary Policy, and more importantly, makes changes to interest rates.
The Bad Thing
I used to always hope for an interest rate cut, so that I could have that little bit more to spend each weekend. That’s the bad thing. What I should have been doing is forcing myself to maintain my loan repayments at the higher amount and effectively get myself “ahead” of where the bank said I needed to be.
The Great Thing
It sounds simple, but do you do it? If you do, then the low interest rates we are currently experiencing are not just a good thing, they are a great thing! If not, you should consider increasing your loan repayments when you get home tonight.
By paying extra off your loan each week, you will notice the monthly interest that your bank charges you starts to decrease at a faster rate. What does that mean? It means that more of your repayment are now going towards paying down your loan, rather than towards interest. Joy.
Even more so though, by getting “ahead” of where you should be, you give yourself and your family a buffer that might be absolutely critical if times get tough. It feels great knowing that you have the ability to ride tough times by putting the hard yards in now.
So when you get home tonight, why not cast a fresh set of eyes over your mortgage and see what you can afford. You’ll be surprised how quickly you’ll notice the difference.
As always, if you feel your loan is uncompetitive, or you’re looking at purchasing a property, please get in touch for a free, no-obligation consultation with our team.