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Wealth Focus: Rate Cut Makes Everyone a “Melbourne Cup” Winner. Posted on October 9, 2018
Most of the banks have since passed on most of this interest rate cut through their standard variable home loan rate. With this interest rate cut, the official cash rate falls from 4.75 per cent to 4.5 per cent and payments on an average $250,000 mortgage will drop about $41 a month.
3 top tips to make the most of this rate cut are:
1. Keep up your current payments
With an interest rate cut, you have the option of reducing your payments or keeping them the same and unless you have been struggling financially recently, the best option is to keep them the same. When you think about it you have been affording the repayment previously, so why not continue it. By making additional payments on your loan, you can save literally thousands of dollars over the life of your loan. This is the absolute best way to save money when you’re looking at the big picture, and when rates drop is the best and easiest time to do it.
2. Put your savings into an ‘offset account’
Whether it be savings for a new car, holiday or general raining day funds, you will be better off having these funds in an offset account rather than a traditional savings account. An offset account, works literally like its name, it offsets the interest you have to pay on your loan by the balance in the offset account. So rather than earning interest at a lower rate and having to pay take, you are better off depositing these funds into an offset and saving on your loan. The more you pay in, the faster you pay off the loan, saving you even more money over the (shortened) life of your loan.
3. Regularly review your home loan
With interest rates on the way down, now more than ever, it’s time to look at all your mortgage options to ensure you have the right loan to suit your needs. Overtime loan products change, interest rates change and most importantly your circumstances change. Therefore, it is always important to regularly review your home loan with the current loan available in the market.
Robson Partners have a comprehensive mortgage calculator that will easily compare your current home loan with the best available in the market.