As you may have heard, there are big “back to the future” changes in the mortgage industry.
Our government regulators have moved to reduce demand for “investment” and “interest only” loans.
The Banks have responded to these government targets in numerous ways that include tighter credit requirements and more expensive debt (in some cases).
As you can see below, when you combine an investment loan with an interest only repayment arrangement, you end up paying significantly more than a principal reducing home loan. This is the great divergence.
Having said that, we have over 25 lenders to choose from and there may be significantly less expensive options (than shown on this chart) for investors.
There is also good news for home loan borrowers. As the banks compete aggressively for the “owner occupied” market, rates and fees are beginning to drop. However, it is important to note that existing customers rarely benefit from this increased competition. In most cases, you need to make yourself a “new customer” to get a better deal.
Please have a look at your current interest rate and email me with the outcome. If you are currently on a fixed rate, ask your lender for a break cost quote and send me the result.