Despite some of our social distancing rules easing, we are still facing some tough economic times ahead as the world deals with the COVID-19 pandemic. For many this will be a time where effectively managing their finances is more important than ever.
We have put put together some key questions to consider when thinking about your finances right now:
Is there something I can do to pay less on my homeloan?
If you are on a variable loan, refinancing is a great option (especially if your comparison rate doesn't start with a '2'). You could be saving money on much better rates, and right now is the time to reassess whether renegotiating or refinancing is right for you.
What if I’m already on a fixed rate?
Even if you are on a fixed rate with a break fee, it may still be a better financial decision to switch. There are a number of rebate offers out there right now which can make the fare more appealing than usual. The interest savings available to you via these offers over the duration of your loan, plus the cash rebate (like ANZ’s $4k rebate for loans over $250,000), may very well cover the break costs.
Should I second guess rates and property value trends?
f you’re holding off for rates to drop lower, consider RBA rates are already near 0 and the government is asking lenders to prioritise low cost lending to businesses to keep people employed. Further reductions are more likely to occur in small businesses lending, rather than residential interest rates.
I am reviewing my expenses and thinking, how can I reduce my costs other than my mortgage?
Consolidation might be something to think about. Consolidating your debts such as mortgage, car loan and credit cards are often a way that you can pay as little interest as possible as these debts move under a lower interest rate. Whilst this simplifies your repayments, if you continue paying this over a longer period of time you may end up paying more. Ideally, reduce your payments if you are under financial stress and increase this back to what you were paying when they were separate and pay off the principal much faster to save big over the long run.
COVID hasn’t impacted my finances (in fact I am doing better), Is there anything I can do to protect myself if that changes?
Build a buffer. If you can afford it, any extra cash that you might have should be put into your mortgage or a linked offset account. By doing this you will help to give yourself some financial wriggle room if things should turn for you.
Financial resilience is top of mind for most of us right now. As you might already know, we have partnered with uno, a company which aims to help Australians find, and stay on, the best value home loan for the whole life of the loan. They have 30 lenders on their panel, including the big four, and they can advise what options are available.
Getting in touch with the right broker can save you thousands.