Real estate investors should consider refinancing their home loans for investment in the current interest rate environment, according to a market expert.
The three rate cuts of the Reserve Bank of Australia (RBA) have made lending conditions ideal for refinancers, said Tim Brown, director of Our Broker, in an article in Raine and Horne.
Brown said credit unions and mutual banks passed on the latest 25% discount to borrowers, which has tightened their competition with the big banks.
"Therefore, the gap between the interest rates offered by majors and other financial institutions for investment loans could reach 50 basis points or 0.5%. In dollars, this difference could go up to two or three hundred dollars a month on an average mortgage of $ 500,000, "he said.
Read also: "Need to know" before refinancing
While some investors might consider setting their rates, Brown said the possibility of future rate cuts by the central bank makes it practical to maintain variable rate cuts. Some lenders offer variable interest rates below 3%, and these offers could drop lower.
Investors can try to fix part of their mortgage and leave the rest at a variable rate, Brown said.
"This is a fractional loan facility that allows you to effectively manage the risk of interest rate fluctuation.At the same time, you can take advantage of rate cuts with the variable part of the loan, "he said.
When refinancing, it is also crucial for investors to pay attention to unexpected expenses. Some lenders do not include the file fees in their advertised comparison rates, while others include several charges in small print.
"These costs also have the potential to blow up the rate advertised by lenders," he said.
Suburbs:
Coorparoo
,
bendigo
,
Berala
,
Toowong
,
Tiwi
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