27/05/2020
It's easy, right, refixing your loan - but easy can cost you a heap of money...
It takes just a few minutes to click on your app to refix for the cheapest special rate and drop the payments to minimum due - then forget about it for the next number of years. PLEASE DON'T! Heres what I come across often and its costing clients big time:
1. LUMP SUM REPAYMENTS
A client had saved some money to put onto and reduce their loan when it came off the fixed period but didnt think about this when they refixed online. They had no idea they had to tell the bank they wanted to do this at refix time so when we got involved it was almost too late. We got it sorted in the end but it caused a heap of unnecessary worry.
2. REPAYMENTS - MINIMUM DUE VS KEEP THE SAME
This person had no idea that if they kept the payments the same as currently paying (often a difference of $80 fortnight or so) or even increase payments they would really smash the mortgage. This is a huge lost opportunity to make the most of these crazy low interest rates. Here's what we often see, with $80 fortnight difference on a loan of $400,000 - thats a saving of $38,138 in interest and 4 years off your mortgage! just by keeping the payments the same. Imagine if you really went hard to smash it what it could look like in a few years!
3. LOCKING IN LONG TERM RATE
Locking in a longer term rate prematurely is a real trap. You may want to sell and could be stuck with break fees. You need to match the fixed period with your own family plans and career goals. If you are thinking to sell then you can fix for a short period of time or just let it drop to floating. We can negotiate a discount on floating as well so its still worth a call.
4. GETTING THE REFIX DONE ASAP
Ive been holding off emailing you 2 months in advance because the current situation is so fluid. Fixing as soon as you are notified by your banking app to get it off your to do list - you never know whats coming up. The economy, your own situation and the global situation all come into play as we've learned in the past 2 months. Covid - 19 has caused rates to drop so I suggest you wait until just before it is due to refix.
5. REFIX ONLINE BUT YOU NEED A TOP UP TOO
If you want a top up at the same time, you may be able to add it to the loan coming off fixed. If this is the case we'd hold off refixing till the top up is approved , but if you fix online first then it becomes another loan to manage.
By reviewing and discussing your loan just before it comes off fixed you can take years off your home loan. Keeping the repayments the same can make a huge difference and consider what a difference increasing them will make. But if your job situation means you need to drop to minimum then that's money in your pocket day to day.
I'm paid by the banks to do this for you and a 5 minute conversation can save you a lot of money and headaches.
So next time your loan is due to come off fixed give us a call 027 503 1080 or email [email protected] . You will prob still fix the loan online but you'll have had the opportunity to discuss your needs going forward and make an informed decision.
