Posted Under: Blog Posted On 04/05/2016
Borrowers don’t want to overpay for their home or investment loans, but six out of 10 borrowers don’t even know their current interest rate. (CUA) And this ignorance could be costing borrowers thousands per year!
On Tuesday the Reserve Bank of Australia cut the cash rate to a record low of 1.75 per cent in a bid to head off falling prices and an economic downturn.
NAB, the Commonwealth Bank, Westpac and Bank of Queensland have all said they will pass on the 25 basis point reduction in full.
The RBA decision will save a typical homeowner $72 a month on a $500k loan.
However, the new cash rate could pave the way for further savings for those willing to shop around and refinance.
For example, by refinancing your home loan under these new rate conditions, a 0.40% decrease in interest rates on a $500k loan would equate to $115 a month reduction in loan repayments and save you $1383 a year totalling $34k over the life of a 25-year loan. Better still, if you keep repayments the same as before, with the new lower interest rate, you could own your home 1 year and 8 months’ sooner!
Call us at A Counting House if you want a second opinion on whether it is worthwhile refinancing your home or investment loan. It could save you thousands of dollars…….