‍The good times keep rolling in the world of home loan rates. But Brendon reminds us that this purple patch shouldn’t just be about using reduced interest payments as an excuse for a second island getaway or new SUV on hire purchase.

Home loan interest rates continue to nudge down. The one-, two- and three-year rates seem pretty solidly set under four per cent for awhile. 

There is talk that these may drop a little further, although it would seem there isn't a lot of space for them to move too much lower.

Given this, I understand the logic of fixing a large part of your home loan at three years. However, I always recommend in such cases to keep the payments the same (either paying extra in to a fixed loan or using some type of floating loan) as this can take years off your home loan. 

Don't forget, when rates dropped to six per cent we thought they were awesome rates. A $350k home loan costs $74 less a week than back in the days of six per cent rates. Surely, if one can't make some headway on today’s sub-four per cent loans, we’d be in trouble if (or when?) they start rising.

I personally like the flexibility of having access to the extra payments I can make in order to keep chipping away at it. But I realise this doesn't suit everyone. Some will be far too tempted to spend this. 

We are all different in what is an "optimal home loan structure" and it is important your structure works for you. Do feel free to get in contact with the team at Velocity and we can work through the best option for your situation.

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.