no deposit home loan
To say that the public is fixated on the ebb and flow in home loan rates is no exaggeration.
It’s with good reason that we all are fascinated with movements in the Feds lending rate and hence the rates we all are forced to pay on our home loans. After all even a tiny one per cent increase can have a dramatic effect on the amount of monthly interest and in turn the duration of the loan and the total amount of interest payable over it’s lifetime.
But given the length of most loans and also the fact that they are mostly immutable in their terms and conditions, is it really worth the attention we give to a rates hike or drop?
Generally we are only given one bite of the cherry ( at the time the loan is written ) and after that we simply have to grin and bear the rate movements as to close out the loan or transfer to another lender is most often extremely costly.
It’s a far better attitude to initially choose a flexible loan with the fairest terms rather than simply basing a decision on a honeymoon or lower rate. That’s because the true cost of the loan may well lie in the conditionality of its terms far more than merely its overall rate.
We would also be better advised to look at ways of adding cash buffer either directly into the loan itself ( if the loan permits extra payments ) or inside a sleep easy account designed to be accessed for extra cash as rated heighten. That’s a far better use of an owner or investors time and effort. Granted it applies more to owners but investors would do well to adopt the same modus operandi.
You see it’s not a good idea to expend energy and emotion on things that we cannot control and interest rates are one such uncontrollable factor in our lives. What we may be able to control however is our ability to see out any long term rate squeezes by planning for the eventuality long before it occurs.
It’s plain old common sense and good planning to factor in an ability to repay your mortgage plus at least an additional 5%. Such a plan will generally f give you lots of time to react and adapt to any rate rises. The money should be viewed as forced savings and as though it were an actual rate that you were paying. Lock the extra funds away so you aren’t easily able to access it however don’t lock it into a loan unless you can access the money by withdrawing the additional funds should the need arise. Unfortunately most loans don’t have that one simple facility so be certain to select one that does.
If you make these two important decisions before choosing the loan package, this is likely to save you from a lot of unnecessary stress. Simply budget and live as though the higher rate a has already occurred and for every month that the rate remains below that top figure you will be miles in front. More importantly there will be little chance of foreclosure and you will sleep easy at night knowing that the banks can’t place you in the dreaded position of giving you 1-3 months notice to come up with funds you simply do not have. You remain in the box seat and thereby enjoy the amazing long term benefits of owning or investing in real estate. St George bank is one of the largest banks in australia
In summary home loan interest rates while important to keep an eye on are far less important than structuring a loan that you can live with from day one