Borrowers have been enjoying historically low interest rates for some time now. However, are happy days are at an end? What is expected in 2019? Would 2019 mean larger repayments for many Australians?
Many homeowners fail to realise that there are other factors that could be influencing or increasing their mortgage just as much or more than any actions the Reserve Bank initiates.
Failure to evaluate your mortgage
Hundreds of thousands of Australians are neglecting to review their mortgage, leaving them paying more than they should every month.
Experts recommend that you review your mortgage every 12 to 24 months to find out if you can acquire a better deal.
If you want to make sure you’re not overpaying your mortgage, evaluate where the interest rates in relation to the market. How much are exit costs going to be? Would there be any gains for you?
Take this route if your bank is not adjusting their rates with the market: consult a financial expert, review your mortgage and consider all the expenses of discontinuing a mortgage, exiting, refinancing, etc.
Clamp down on interest-only loans
Interest-only loans are normally connected with investment lending, but owner-occupiers are also borrowing via this method. But a crack down on interest-only loans by APRA is making sure that borrowers are paying considerably more, both at present and over the life of the loan. Right now, owner-occupiers who are paying both principal and interest are getting the most affordable mortgages. Interest-only repayments are drawing very high premiums at present, as well as investors. An interest-only loan can get a premium of half a percent, based on standard rates.
Paying more for property
People who borrowed more will, obviously, pay higher mortgage. Experts warn that those who max out their budget could end up heavily affected in the coming months and years. Having insufficient deposit will mean getting a lender’s mortgage insurance (LMI), which could be hefty in many situations. There are many creative ways you can limit or lower LMI so talk with a trusted broker. If you don’t know any brokers, then just ask One Agency Pinkerton Properties and we will be able to point you in the right direction.