We are all aware that COVID-19 is still hampering us as the quiet assassin. As it lurks behind doorways and on shopping trolleys ready to attack, there could be a way to take advantage of this situation. You may be able to use this COVID crisis to get ahead financially with a little clever thinking.
As the government encourages us to work from home and keep to ourselves, we have all had more than ample time to focus on our homes. That and going crazy under each other’s feet. We’ve had time to revise the budget, assess the financial leaks, and contemplate tightening our belts ready for an uncertain future.
This is where we at Moneyhive can help you.
Below is a list of several strategies that could help you get ahead financially and take advantage of these crazy times.
Shopping Around for a Better Deal
It may have been years since you set up your home loan. Many things have changed and there may now be better deals available to save you money. We have found that Australians generally overpay on their mortgage by way of high interest or excessive fees. Don’t just sit back and waste money. Speak to us and we can check your loan against others to find out how much we can save your family. On average, you could save up to 1.72% by refinancing your loan!
Fix Your Loan
As Australia struggles through the Covid-19 crisis the Reserve Bank of Australia is trying to protect the economy by retaining record low cash rates. You can capitalise by refinancing your home loan to a fixed rate. You will pay less monthly and free up some cash flow for your family.
Consolidate High-Interest Debt
We are all guilty of racking up a credit card or personal finance debt. This could be the perfect time to wipe the slate clean and amalgamate those high-interest rate debts into your refinanced low-interest home loan.
Release Some Equity
If you have been paying your mortgage for many years, you are sure to have built up a substantial amount of equity against your home. There may be surplus funds you can cash in from the loan. If you are thinking about renovating your bathroom or putting on an extension to make life easier and increase the value of your home, this is the perfect opportunity. You can refinance your home loan and use the surplus available to improve your home. Alternatively, you may want to use the funds to invest in the share market or keep as a rainy-day reserve for family.
Cash Incentives To Refinance
You know things are getting rough when lenders are offering new customers cash to refinance their loans! You can really maximise on this offer, but you need to be aware of the fees and interest rates associated and balance them against the gain. We can help you with this as we have direct access to over 30 lenders. In the current market, lenders are offering cash incentives of up to $4000 or discounted fees depending on the amount you are borrowing and the percentage of the value of your home.
Reduce Interest – Retain Current Repayments
Another advantage of refinancing your mortgage to a lower interest rate is the reduction in monthly minimum repayments. This can be used to increase your family cash flow, or you can use the strategy to get ahead on your mortgage. By reducing the interest rate but keeping your monthly repayments at the level you are used to, you will literally cut years off your mortgage. Paying the loan faster than required directly reduces the total interest you pay and equates to you paying a higher proportion of principal each month.
Switching to Interest Only
This can be a great strategy if you are short on cash flow and need to have a period of reduced mortgage repayments. You will not reduce the loan principal over this period, however, you will be paying less each month. You should be careful with this option as it can move you backward, but it does have its benefits if managed well.
Increased Flexibility
When refinancing your home loan, your driving force may be to gain more flexibility in your mortgage. This may equate to the loan you are looking for having weekly, fortnightly or monthly payment options which can coincide with your salary. There may be an account facility to offset against your mortgage interest. This would allow you to refinance and remove your equity, offsetting it against your mortgage until you use it, reducing the interest. Another facility could be a redraw facility which lets you pay extra into your loan, then redraw it when you need extra cash. With access to over 30 lenders, we can find the loan with the right features for you.
Health Check with your Mortgage Broker
Checking with your Mortgage Broker to see if they have any better rates can be a quick and easy way to save on your loan. They may be able to switch you to another loan type with minimal fees or assessments. Be careful with this option as you could still be better off researching your options with other lenders and saving a lot of money.
Some variables you will need to factor into your decision to refinance include your current employment situation. Whether you are self-employed, unemployed, part-time, or full time will make a difference in your ability to obtain approval to refinance. Another factor is the valuation of your property. Many valuations are being scaled southwards now as valuers anticipate a future decline in the property market. This may affect your borrowing ratio, making the exercise potentially fruitless and a waste of money.
At Moneyhive, we realise that your situation is unique. Trust us to utilise our experience and relationship with over 30 lenders to get the best mortgage option for your family. Our wish is to level the playing field and help Australian families save.
