How Things Have Changed in Real Estate
In the last six months so much has changed in the real estate market in all areas. There have been the interest rate drops, price drops and continued first home grants, all of which have impacted the real estate market in one way or another.
In the past we have talked about refinancing and although in theory this is still a good idea in many cases, the practicality of it has changed because with such a rapid and dramatic decrease in interest, the banks are demanding big payout sums for breaking fixed interest mortgages.
Break costs for mortgages have increased by up to 600% in some cases since September 2008. It sounds like a ‘money making’ scheme by the banks, but in actual fact it is because the banks have to resell the loans at a lower level, hence costing them money. Different lenders have different formulas for working out their break costs.
In saying all that, there are cases where it still works out to be financially viable to refinance. It all needs careful calculation and you should involve your mortgage broker and your accountant if you are seriously considering this strategy.
Filed Under: Property Investment Tips
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