NAVIGATING RISING LIVING COSTS: Local finance broker shares valuable tips
BUSINESS FEATURE
As the rising tide of living expenses strains Douglas Shire residents, financial guidance becomes invaluable. Newsport asked experienced finance broker at Williams Cete & Co, Alex Cook, for insights into managing this cost of living challenge.
Driven by a passion for finance, Mr Cook fosters trust with clients to address their personal financial matters such as guidance on interest rates, navigating the fixed vs variable rate dilemma, and offering hands-on mortgage refinancing support with concrete cash flow-saving examples.
In the interview with Newsport, he shared valuable tips and insights to assist people during these uncertain times.
Q&A with Newsport
Newsport: “Amidst the rising cost of living, can you provide insights into the current trends in interest rates for mortgage loans and potential future shifts?”
Mr Cook: “In the past 18 months, interest rates have steadily risen. Currently, we’re in a period of stability but predictions suggest more increases are likely next year, albeit less drastic than the monthly quarter-percent hikes we've seen recently. Inflation remains a concern, and external factors create uncertainty for the coming year.”
Newsport: “Given this, how do you help clients decide between fixed and variable interest rates?”
Mr Cook: “Choosing between fixed and variable rates is a common dilemma. Fixed rates provide consistency but are slightly higher right now. If you’re risk-averse, consider a one- or two-year fixed rate over three years. Variable rates are currently lower and offer flexibility with extra repayments and offset accounts, reducing overall interest. Some clients prefer a mix of both for the best of both worlds.”
Newsport: “What are the potential benefits of refinancing a mortgage, and are there common misconceptions that people should be aware of?”
Mr Cook: “Refinancing can mean better rates and simpler debt management, though it’s not cost-free, with fees typically $500 to $800. However, these costs are usually offset by first-year savings. Additionally, be cautious of ‘honeymoon rates’ offered by some banks, as they often revert to higher rates after a short period.
“Refinancing can also benefit self-employed clients with ATO debt, a common issue among small business enterprises or ‘SMEs’, making them ineligible for bank loans. However, by refinancing ATO debt into a home or consolidation loan, not only do they gain eligibility for loans, but they also experience reduced monthly payments, improving cash flow. This scenario likely resonates with many self-employed Douglas residents.”
Newsport: “Could you share a success story where a client significantly improved their financial situation through refinancing?”
Mr Cook: “I helped a single mother facing tough circumstances. She was dealing with a divorce, was on the brink of losing her house, while dealing with medical bills for her daughter’s rare cancer diagnosis. After a year of working together, we successfully refinanced her house, consolidated her loans, and released equity for her daughter’s treatment, saving her an extra $400 per week.”
Newsport: “Is there anything else you’d like to add regarding mortgage financing and refinancing in today’s economic climate?”
Mr Cook: “During challenging times, it’s crucial to be proactive. Some strategies, like switching to interest-only payments temporarily or refinancing over a 30-year term, can improve cash flow in the short run. Don’t hesitate to reach out to financial advisors or brokers for guidance. Communication with your current bank's retention team can also lead to improved offers. Lastly, while buy-now-pay-later services may be convenient, they can impact your eligibility for loans. Keep this in mind when considering your financial situation.”
* It’s important to note that finance brokers, like Alex Cook, can provide information about bank products and interest rate trends but cannot offer personalised financial advice, highlighting the importance of seeking individualised guidance based on unique circumstances.
For more information about finance broking service at Williams Cete & Co click here.
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