Reduce that loan: 3 top tips

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So rates may not have dropped this month, but that’s no reason not to take action and reduce those investment property loans. Read on for three top tips.

“The decision to hold the cash rate at the current level of 3.5% was expected by the majority of economists and market commentators, but it is likely many borrowers were hoping for a third consecutive monthly rate cut,” said Mortgage Choice spokesperson, Belinda Williamson. “The fact is that a number of Australians are still worried about the state of our economy and the impact of recent turbulence in global markets.”  

She added that, while, in many ways, the Reserve Bank’s decision to hold rates steady this month is a vote of confidence in the Australian economy, that’s no reason not to take positive steps to take control of your property finances.

She offered mortgage holders the following three tips to help get their balance sheets on an even keel:

  1. Take control of your lender: build a relationship with your lender, and don’t be afraid to ask them a range of questions. Just because rates are on hold, it doesn’t mean that you can’t ask your lender for the best deal on your home loan in terms of interest rate, fees and features.
  2. Take control of your loan: there are certain features of a home loan that, if used appropriately, can save you thousands of dollars and cut time off your loan term. Such features include: offset accounts – attached to a home loan and help to reduce the interest accumulated on the loan; extra repayment options – allow borrowers to make extra repayments by putting additional funds into the loan and/or increasing the frequency of repayments; and a redraw facility – enables borrowers to place their income, savings and/or extra repayments into the loan and to withdraw funds when needed. In some cases this is at a cost. It is an alternative to storing money in a savings account, where the interest earned is taxable.
  3. Take control of your finances by putting an expert in the driver’s seat: with so many lenders and loan products in the market, it can be difficult to identify the best home loan option for you in terms of your financial goals, interest rates, fees, features and even lenders’ customer service performance, says Williamson. And, unsurprisingly for the spokesperson of a national chain mortgage brokers, she suggests that having a broker on your side can work wonders.

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