Benefits from record low Interest Rates

During the year 2020 we saw Home Loan interest rates fall to record lows. With the RBA cash rate expected to stay at 0.1% for at least another 3 years, Home Loan rates are likely to stay low in 2021. Low interest rates can provide ongoing benefits to both home buyers and existing mortgage holders.

 

Benefits for home buyers:

Low interest rates can make purchasing a new home more affordable for home buyers. At the start of 2020, the average variable rate for a $300,000 mortgage over 25 years was 3.73%. Under this rate ongoing monthly repayments would be $1539, with total loan repayments being $461,739.

Since then, average variable rates have fallen to approximately 3.32%. At this lower rate, ongoing monthly repayments would be $1473, with total loan repayments being $441,920.

In this example mortgage holders save $66 each month or $19,819 over the entire mortgage term. These are indicative estimates only for the purpose of demonstrating potential savings through lower interest rates.

Low interest rates have also provided an opportunity for people to enter the property market who were previously not in a position to do so. Lower interest rates can increase your borrowing capacity for a home loan. This means you may be able to get your hands on your home sooner rather than later.

Additionally, you may not need to save up for a 20% minimum home loan deposit. Home buyers may be able to get into the market with a smaller deposit through Lenders Mortgage Insurance. By insuring your mortgage, lenders can lend you a higher percentage of the purchase price. This can allow you to make a deposit of as little as 5% in some cases. At Suitable Loans, our Mortgage Brokers can assist you with a Home Loan.

Benefits for existing home owners:

If you are an existing home owner you may want to consider refinancing your home loan. Home loan refinancing can potentially save you money on your monthly repayments. This can turn into substantial savings over the life of your home loan.

Refinancing works by replacing your current mortgage with a new one. You can stay with your current lender who may be able to provide you with a better home loan product. Alternatively, you can also move to a different lender.

With interest rates lower than ever, it may be a good idea to start comparing your current home loan to other home loan products. At Suitable Loans our Mortgage Brokers can help you to look at ways to start saving money.

Speak to a Suitable Loans Mortgage Broker today.

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