How to take advantage of low interest rates ———- Part 1

The Reserve Bank of Australia came out last week and left cash rates on hold at a record low 1.50%. After reducing rates in May and August, Glenn Stevens – the Governor of the RBA, judged that holding rates steady was consistent with sustainable growth in the economy.

How do you take advantage of these rates?

With rates this low – it makes a lot of sense to make hay while the sun shines, strike while the iron is hot – whichever cliché you prefer.

Firstly, you need to ensure you’ve got the right product.
Banks are all about new business.
Introductory discounts, bonus points, cashback offers and lower rates to attract new customers are extremely common. Unfortunately for existing customers, this usually means their loyalty goes unrewarded.

Now that banks have been forced to remove excessive re-financing costs, it is easier than ever to get a better deal.

How often should I review my loan?

The RBA meets monthly to review interest rates.
We certainly wouldn’t recommend borrowers review their own lending products this often, but we often tell our clients at FFBD that doing a review of your home loan every 2 years is about right.

What do I need to know about my current loan?

Interest rate – Obviously the interest rate will have a huge bearing on the overall cost of your mortgage.

Fees – Is there a monthly or annual package fee? What is included in this? Most large banks charge a package fee and include branch access, credit cards, ATM use etc.

Features – Does your loan have an offset account? A limit on redraw? Or perhaps direct salary crediting?

What loan is right for me?

That will depend on your situation.

Is your goal to repay the debt as fast as possible? Perhaps an online-only low-cost low-feature loan is the way to go.

Have a holiday coming up and need access to cash? A facility that provides easy redraw with no fees would be of benefit.

Have a mortgage as well as investment debt? It’s likely a loan with the ability to split accounts and move balances would suit your situation.

No matter your situation – it is very likely there is a loan available at a cheaper overall cost that what you are currently paying.

Feel free to contact us at FFBD to get a free debt review to see whether you can save money on your mortgage or investment loan.

In Part 2, we’ll look at some strategies to employ once you’ve got the right loan for you in place.