When RBA governor Philip Lowe cut the official rate to 1.0 per cent in July, the lowest in the country’s history, homeowners with mortgages were able to save thousands of dollars by paying off their loan faster and with less interest.
“People do have to be aware that if they think they can put more into their loan and would like to knock it off earlier, then you might be restricted if you have a fixed-rate loan,” Canstar group executive of financial services Steve Mickenbecker said. “We then manage this risk based on the understanding that all the required repayments due over the whole of the fixed-rate period will be made in full and on time,” the bank said in document to its customers.“If you make a prepayment or change to another interest rate or product or another repayment type, that will change our funding position.
The finance expert says it gets tricky when borrowers suddenly come into a windfall, such as through an inheritance, and are unable to put a dent in their loan without paying a penalty, which can be up to $20,000.
What garbage. The basic features of both variable and fixed rates loans should be explained to consumers getting a home loan. If the person writing the loan is not providing this basic information then they are not doing their job.
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