In the latest OCR announcement, the reserve bank indicated that rates in the short term are more likely to drop than increase due to the weakening economy and cautious global outlook. Certainly, it appears likely that rates will stay very low for the next 1-2 years. This has resulted in the fantastic 3.89% 1 and 2 years rates and 3 year rates at circa 3.95%. If you were a betting person, the advice would probably be to go for a 6-12mth rate and review things again and you will probably get away with that strategy. If you have significant debt, I have always been an advocate of having a bet each way as things can change (ie don’t have all your rates coming off at the same time). If you have rental properties, I would be very tempted to put some long-term rentals on say a 2 or 3 years 3.99% or even a 5 years 4.29% especially if the rental property is cashflow positive at these rates which many rental properties will be. Obviously, you shouldn’t fix for a longer term if there is a chance you will want to repay the debt before the end of the fixed term.
Many investors/home owners are under the impression that they only use mortgage advisers to negotiate new lending for them. The reality is Financial Advice should be long term in nature not just for new mortgages but also renewals of your existing lending for the long term. We find that most clients can save significant money by having their broker negotiate fixed rates on their behalf directly with their existing bank. Like any good business, you’ll find the Bank won’t give you their best deal unless they feel that they have too and that’s where we come in. At Threefold we deal with all of the major lenders and we know at any time exactly what their best non advertised 1, 2 and 3 year rate available in the market is and we pride ourselves in securing you the same.
A good mortgage broker should also be an expert in reviewing your loan structure, tailoring your mortgage to work for you and your goals and budget. Many existing structures we come across are incorrect, outdated and costing clients unnecessarily. Significant savings can be gained from a restructure that will align with your financial goals. In recent months we have found that breaking a higher fixed rate loan and moving to the lower rates now available in the market (sub 4%) is often very profitable for clients – some clients end up saving over $5,000 in one year simply by doing this!
Having a mortgage broker do this for you isn’t a difficult process, all it takes is an email and they can obtain break fees and do a cost/ benefit analysis on your behalf to determine whether breaking and re-fixing at a lower rate is worth your while. So if you do have a fixed rate coming up or are on higher rates than the current market provides please get in contact and let us see if we can save you money. It’s better in your pocket than the banks right?
This service is entirely free to you so you have nothing to lose!
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