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O.K. what can our smart phones really tell us?




Many clients are finding much to their delight that frequently in the current climate, the fixed interest term of their mortgage can be re-fixed - with an interest rate significantly lower than the interest rate applicable to the term expiring.


Whilst this doesn’t sound much the “devil is in the detail”


There are a number of financial calculator apps in both the Android and Iphone “Play Store” purchase facilities. These will frequently give us the detail that we need, to really see the difference in the reduction in our mortgage fixed term interest rates.


I find myself frequently using that valuable calculator!


If I had borrowed $300,000 principal & interest for 30 years at 3.99%pa fixed for 12 months - 12 months ago, my monthly mortgage instalment would have been $1,430.52 and my mortgage balance at the end of the fixed period $294,707.67.


If I look at re-fixing the fixed interest term for another 12 month term, the new interest rate is likely to be 2.29%pa, and so the new monthly instalment $1,159.74. I choose to keep paying the previous monthly instalment of $1,430.52 as I’m used to it, and so there is more money now going to reduce the mortgage.


So what does it all mean?


Well, instead of having another 348 months left until the mortgage is paid off, I now have 268 months – a saving of 80 months (or 6 years and a bit!)


Of course it can always go the “other way” as interest rates rise again – if you want to know more just give us a call on (03) 2818605 or email:


jerome@thompsonmcneill.co.nz



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