Things move quickly these days and we’ve all got less time to take it all in. We take a look at the last few weeks and provide some tips and information sources that may be able to help you make better finance decisions to improve your lifestyle and financial security.
Zac Peteh, finance broker for Sydney and the Central Coast
Today’s finance tip
Even when lenders pass on interest rate cuts, it’s a good idea to leave your repayments at the same level. If interest rates drop by 1% but you maintain your repayments at the same level you can reduce the term of your mortgage by up to 6 years.
So how does that work?
For example, based on a variable rate loan of $500,000 over a 30 year term, a 1% reduction from a rate of 5.5% down to 4.5% would save approximately 5 years 10 months if you kept the repayments at the original amount. Not only do you reduce your loan term, you’ll pay around $91,487 less interest over the life of the loan.
Not all loans are created equal and this flexibility is only available on variable home loans.
So when you receive a notification of a mortgage repayment reduction, and you can afford to do so, tell them you’d rather keep it at the same level - you’ll be effectively paying the same but saving years and large amounts of interest without even knowing it.
Interest rate wrap up
With record Sydney auction clearance numbers and properties often reaching sale prices above expectations it’s not overly surprising that the RBA has decided to keep rates on hold at their April meeting. Read more...
By keeping interest rates on hold is the RBA putting house prices above the jobless? Read more...
Latest Self Managed Super Fund (SMSF) buzz
The Federal Government is considering changes to pension benefits for wealthy retirees. To find out what this may mean for you read more here...
While many Financial Planners recommend a SMSF starting balance around $200-$300K, some believe that a lower balance of around $100-$200 should not impede their establishment. Should a SMSF be more concerned with strategy or funds? Read more...
*Clients should seek the advice of a Financial Planner prior to considering a SMSF