finances
Managing in a pandemic
WE’RE NOW ALMOST TWO YEARS INTO THE COVID-19 PANDEMIC, AND THAT HAS HAD AN IMPACT ON VARIOUS AREAS OF OUR LIVES. THE SOCIAL IMPACTS HAVE BEEN EXTREMELY DIFFICULT, BUT POSSIBLY THE MOST SIGNIFICANT IS THE FINANCIAL IMPACT.
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on’t bury your head in the sand; open communication lines with lenders is the best response.
All financial institutions have policies and procedures in place for these situations. They are willing to work with you and in some cases fees and charges can be waived. If you’re suffering from financial hardship, speak with your broker. They are trained to support you during tough times and will be able to help you find the best way forward. Relationships are still key to your success, and you need to trust the person you are dealing with. A broker will constantly develop strategies for financial sustainability and negotiate the best outcomes for you. Refinancing is just one option you can explore. Your home loan might have been great when you first got it, but banks are competitive, rates change, and lending products evolve. Your home loan might not be working as hard for you as it could be, and it could be costing you money. Perhaps it’s time to review your mortgage? The benefits of refinancing are:
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Lower interest rates or a reduction in fees and charges;
There are costs associated with refinancing, but lenders are now rebating this to attract new clients, thus making the exercise cost neutral.
Independent award-winning brokers reviewing your loan on an annual basis;
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Unlocking equity in your home for renovations or investments;
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Lower repayments; and
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Debt consolidation – you might decide to consolidate some of your other high-interest debts such as credit cards into one mortgage with a lower overall interest rate. This means you’re paying lower interest and in many cases, you can even reduce your monthly repayments, which frees up your cash flow.
Is a home loan refinance right for you? There are many reasons to refinance your home loan but make sure you get a quote from a mortgage broker before you jump into anything. You need to be sure about what you’re hoping to achieve by refinancing. Discuss your goals and aims with your mortgage broker before making a final decision. Who has the best home loan? It is the one question a mortgage broker hears all the time.
Consider the potential savings if the difference between the two rates is 30 basis points on a $600,000 loan over 30 years.
The best home loan is the one that suits your individual needs and circumstances. Everyone’s financial situation is different, so trying to copy the home loan solutions they’ve chosen might not be the best option for you.
For example, $600,000 at 3.99% is $2,862 per month, or at 4.29% is $2,966 per month — that’s a difference of $104 per month, and a difference of $37,682 in interest over the life of the loan.
You need to consider what will fit your personal budget, your own goals and your own needs.
Fixed or variable rates? That is the million-dollar question, and the answer depends entirely on you. Banks offer packages that can meet your needs. Your mortgage broker will know which packages would suit your personal budget and circumstances. Speak with your mortgage broker about what options are available for you. In some instances, you could reduce your interest rate, consolidate other debts or perhaps even free up some extra cash. You might find that refinancing could save you thousands of dollars in fees and interest charges. A mortgage broker can help you at any stage in your financial journey - whether you’re saving for your first home, or wondering if you’re still getting the right deal with your existing lender. You can make an obligation-free appointment with us at a time and place that suits you. ■ Chantelle Shevels, CEO, Grass Roots Finance.
Disclaimer: The information in this article is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser. No material contained within this article should be construed or relied upon as providing recommendations in relation to any legal or financial product.
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