Interest Rates Are Dropping.


With interest rates dropping a total 0.75% over the past six months, you may have found yourself with some extra cash in your pockets.


What should you do with it? Well, that depends on your overall goals and strategy.


How much are you saving each week on lower repayments?

If you have a $1 million in debt, a 0.25% rate drop could save you about $2,500 per annum. Since we have just seen three 0.25% reductions, that means you could have saved $7,500 this year.


As for Nathan, each 0.25% rate reduction saves him about $45,000 off his yearly interest costs – which is enough to fund another deposit for a new property.


What have our clients been spending the extra cash on?

Nathan says some of his clients have used their extra savings to fund a day off work each week. They have been able to cut back their working week from five days to four thanks to the extra cashflow the 0.75% reduction has brought them. 


Should you use the savings to pay down your mortgage?

While many borrowers think they should commit the extra savings towards paying off their loan, Nathan says this may not be the best idea.


He believes rates are heading towards zero and that the funds could be used for something more fruitful.


What options are available?

Aside from using your interest savings to fund your lifestyle, there are plenty of options available depending on your goals and strategy.


You could put the extra cash towards a deposit for another investment property, or, you could use it to add value to an existing one.


It all depends on what you want to achieve and how far you are on your journey.


Getting advice from the experts.

If you’re not sure how you should use your extra capital. It is always worth asking your team of trusted experts.

Nathan is currently offering portfolio reviews to anyone in need of advice – so feel free to reach out for help.


Have you saved much off your mortgage this year? Please share your experiences in the comments section below.

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