Is a mortgage rate-lock worth it?
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
Better Loan Solutions in Mornington Peninsula • Learning Centre • Insights
With interest rates at record low levels, homeowners are starting to think a lot more about fixing their home loans.
The RBA has made it known that interest rates are likely to stay low for a while yet; however, there is increasing evidence to suggest that they will need to rise sooner rather than later.
With the pressure on supply for construction, labor shortage and the other post Covid factors, experts expect inflation will be on the
cards for Australia. Whilst interest rates are expected to rise, inflation is expected to increase quicker and higher than any interest
rate rises. For homeowners who want some security around their monthly repayments when other aspects of expenditure are on the rise, a good
idea is to look at a fixed-rate home loan.
As the name suggests, a fixed-rate home loan will allow you to lock in your interest rate for a period of time, which is normally around 2-5
years, after which, the loan will generally revert to a variable rate.
One of the things that can catch homeowners out, is the fact that the actual rate you receive on your fixed-rate home loan doesn’t begin until the loan is settled. That means the rate you see when you apply for a fixed-rate home loan can be very different from what you actually get. In an environment in which interest rates are likely to rise, this is something that you need to be aware of.
Rate Lock
One of the things you can do to protect yourself in the event interest rates look as though they are going to rise is to secure a rate
lock. As the name suggests, a rate lock will ‘lock in’ the interest rate on your fixed-rate home loan at the time of application or,
perhaps, when you pay the rate lock fee.
This means that even if rates move higher between the time you apply and the time the loan is settled, you will
still receive the same agreed-upon interest rate.
Generally, lenders charge either a fixed fee or a percentage of the home loan, which is normally up to 0.2%, to access a rate lock. The
rate lock will last anywhere from 60 to 90 days and varies between different lenders.
As interest rates come into focus and more and more borrowers consider either taking out a fixed-rate loan or at least fixing a portion of
their mortgage, it might be worth considering whether to look at a rate lock.
A rate lock is most effective in a period when rates will potentially rise. It is also most suited to borrowers who will likely need a bit of time to find and secure a property.
LIVE EVENT
3rd May 2024
Welcome to Mornington Peninsula's original pop-up pre-loved market with a difference. Fashion For A Cause is a not-for-profit
fundraiser event. Grab a fashion bargain or unique piece, wine with friends, bid on silent auction items, all to raise funds for Clothes
4U.Inc. All proceeds from the event including stall sales, ticket sales and clothing purchases on the night will be
double-dollar-matched and donated to Clothes 4U Inc.
Low-interest rate loans used by dealerships are a good way to get buyers in the door – but if you’re not careful, you may end up overpaying in the long term.
Car loans can feature either fixed or variable interest rates, each with its own set of advantages and disadvantages.
With the surge in property prices, the barrier to entry has never been higher. However, there are many different ways to get into the market.
The difference between the price of units and houses continues to grow, with homes now costing $300,000 more.
The national median house price officially reached $1,005,242 marking the highest price on record.
Vendors are looking to capitalise on rising prices with a surge in new listings hitting the market across Sydney and Melbourne.
Running a business is not just about crunching numbers and meeting targets; it's also about fostering a strong team dynamic and creating a shared vision. That's why I recently organized a 2-day corporate retreat for the entire SMART team at Phillip Island, and it turned out to be an unforgettable experience.
A recent case highlights the dangers of taking money out of a company without carefully considering the tax implications.
The revised stage 3 tax cuts have passed Parliament and will come into effect on 1 July 2024.
From 1 July 2024, the amount you can contribute to super will increase.
Thousands of taxpayers and their agents were advised by the Australian Taxation Office that they had an outstanding historical tax debt.
The Fringe Benefits Tax year (FBT) ends on 31 March. We explore the problem areas likely to attract the ATO’s attention.
In Australia, testamentary trusts have become useful for more people than ever before. They're not just for the wealthy anymore.
In this podcast episode of The Accountant That Builds we're starting off with a deep dive into the world of superannuation, helping you understand how to make the most of your retirement savings.
There are effective ways to fit out your practice for maximum efficiency and success.