As was widely predicted, the board members of the Reserve Bank of Australia have today made the decision to cut the official cash rate by 0.25% – the official interest rate is now at a new record low of 0.5%. All eyes are now on the banks to see whether they will pass this on to their customers.
Debt-free in 2020?
Most people dream about being debt-free. With record low interest rates, if you have equity in your home it may save you a lot of money to relook at your home loan with a view to paying off all of your debts.
If you have a number of higher interest rate debts, consolidating your debts will allow those higher interest debts to being rolled into your home loan, so they would be covered by a lower interest rate.
Credit card debt is a perfect example. Many people have more than one credit card; often, they are close to the limit. Take a look at the interest you’re paying on your cards. Then, compare them with your home loan interest rate.
Any other loans you may have – personal loans, overdrafts etc – can also be consolidated into a single monthly payment. And because it’s spread out over a longer period of time, as per most home loans, the addition to your monthly mortgage payments may be surprisingly low.
Refinancing your biggest asset has many advantages. But remember, it’s not as easy as simply switching banks to a lower interest rate – it’s a complex issue that needs careful consideration. However, if you do it right, you could save a bundle.
If you have any questions regarding this or any other aspect of your mortgage, please feel free to give me a call.