How can you best manage declining interest rates?

Falling interest rates; the news we’ve all been waiting for! Here’s our tips for best managing a falling interest rate environment.

Keep your repayments the same

It may not be the advice you want to hear, but if possible, we strongly suggest keeping your repayments the same. This will help pay your mortgage off faster and set you up better in the long term.

It’s all in the structure

We always recommend our clients split their mortgage in to multiple loans, giving you greater flexibility and hedging for future interest environments. 

When interest rates are declining, it can be tempting to lump it all together on one term, but it’s important to consider longer term horizons and acknowledge that nothing is more consistent than change. The last thing you want it your entire mortgage rolling at a time when interest rates are on the rise or even at their peak.

Refinancing

If your loan is due to expire and you’re Bank isn’t being competitive, it can pay to look at the wider options.  Just looking at the options can put your bank on notice that they need to sharpen their pencil to retain your good business. Some Banks have even been paying ‘retention cash’ to existing clients.

Lenders continue to offer strong competition for new business, with cash contributions offered to ascertain your business worth around 0.90% of your loan balance. There’s also lenders that offer a refinance service whereby you don’t have to pay any legal fees to switch banks.

If your lending isn’t due to roll over, you may even want to consider breaking your mortgage and we can provide some tools to look at these options. Depending on the remaining term, this can be beneficial and we can help you run the numbers on this. Get in touch if this is something you’d like to explore; we’re here to help.