‍If you have a home loan, or about to get one, you will be glad to know that interest rates are continuing to nudge downward. Meaning there is practically free money up for grabs.

We have been securing short-term fixed-interest rates for our clients for around 3.5% and in the last week or so they have been nudging even lower. 

Some of this is likely in preparation for what most economists and the markets are predicting to be another drop to the Official Cash Rate on 11 November.

We'll stay tuned to see what happens, but (apart from the obvious lower mortgage payments) there are ways we would encourage you to take advantage of these low rates.

When your current fixed rate is due to roll off, let us know, as this is a great time to slash the length of time you’re paying off your home loan, without it costing you a cent.

A very important question we ask all our clients at re-fixing time is this: Do you want to reduce your regular repayments to the minimum or do you want to keep the payments to stay the same?

You want to seriously consider the latter by keeping them the same.

Here’s why …

Let's say you have a 30-year $400k home loan and your current rate is 4.3%. It is about to roll off and you can get a new rate at 3.5%.

Your current minimum payments were $913/fortnight and they will reduce to $828/fortnight.

If you keep the payments the same (i.e. $913/fortnight), assuming there are no other changes through the life of the loan, your 30-year home loan will now become a less than 26-year loan which will save you a whopping $41,931 in interest payments. And imagine being debt-free four years earlier!

I also realise there are lots of reasons you would choose to reduce the payments to the minimum: you may have a short-term cash flow crisis, you may be saving for a change in life circumstances, you may have another debt reduction strategy, and so on.

The moral of the story … Refixing your home loan is not just about choosing the best new rate. It is a chance to re-look at your debt reduction strategy. Do get in contact with your Velocity Financial adviser and let’s talk through what is best for you.

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.