Education - the key to a good plan

​Although the Reserve Bank of Australia has made no change to official interest rates since August 2016, inevitably at some time in the short to medium term future that will change. Exactly when that will be no one can be certain of. All so called “experts” will have an opinion; however nobody can predict interest rate cycles with any certainty.

​The official cash rate currently sits at an all-time low of 1.50%. What this means to a borrower  is that the  actual rate a customer will be paying through the retail provider of their home loan will generally be around a variable rate of 4.00% in the current marketplace.

If we use the example of a borrower taking out a new loan of $250,000 over 30 years at 4.00% variable the minimum repayment required would be $1282 per month.

In this example the $1282 per month is the minimum payment required every month for the next 30 years. This does not take into account any rate changes during the term of the loan, or just as importantly it does not take into account any change in your personal circumstances during that time.

Having pointed that out, there would obviously be very likely to be a number of significant changes to your personal circumstances during that time (e.g. job loss/change; birth of a child; change of relationship status; education expenses; additional debt obligations etc.).  

I therefore pose the question to you – How do you educate yourself around the options available to you?
Let me further illustrate my point;

• If the example loan of $250,000 changes to a variable rate of 6.00% the minimum payment becomes $1499 per month.
• If the example loan of $250,000 changes to a variable rate of 8.00% the minimum payment becomes $1835 per month.

What I think this ultimately means for borrowers in the current low interest rate environment is that if you are currently living payday to payday you NEED to make changes NOW.

YOU NEED A PLAN!

You need to seek some objective direction from someone independent of your current lender. You need to seek some assistance from someone with the skill, empathy and experience to provide you with non-judgemental training and education in the more efficient and effective management of your own financial affairs.
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“My coaching program is designed to empower people to develop a capacity to make better financial decisions on their own behalf; and enjoy the financial peace of mind that can be created with appropriate levels of planning and control.”      
 
To arrange an obligation-free consultation contact Leigh today.

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