Your age and time in the market will have a large bearing on how you perceive mortgage interest rates. If you we like me and had a mortgage in 1990, during the “recession that Australia had to have”, you’ll recall interest rates soared to 18 per cent, whereas newcomers might wonder what all the fuss is about as they face their 27th straight month with a cash rate of 1.5 per cent. Although we don’t know when, most experts have said that the next move will be upward.
If you’re anticipating a rise in the future, a good option would be to lock in your rates with a fixed-term mortgage for typically anywhere between one year to about five years.
Your ability to make extra repayments and pay it out faster may be limited and a common maximum is $10,000 per year.
Many people don’t realise that you can split a loan – so a percentage is fixed and a percentage is variable. So if even if variable rates do go up, at least you’ve got a portion of the loan that you can aggressively pay down or try to reduce.
Sometimes you can try to get your rate discounted – the amount will be influenced by your behaviour as a customer, for example, if you make your repayments on time and by the size of your loan – the larger it is, the more the banks are willing to discount it.
And be glad you’re not in Argentina at the moment, where rates are above 60 per cent.
For more information about our current market please call Andrea Tucker 0402 487 887