Money Matters

Refinance friction

Dear Mum,

The other day, you yelled at me when I brought up the ‘M’ word in our conversation. You told me that the global economy was flailing, that borrowing rates in America would drop to 0% interest, that I was stupid for wanting to fix rates for a portion of my loan in such a volatile market. You accused me of being a smartarse and not listening to you, before telling me to ‘do whatever I wanted’ in a tone that suggested that if I did choose to ignore your advice, I would not be welcome at your house; any progress we had made towards reconciliation since the day I left home unmarried would be made redundant.

This was a conversation I might have expected from you if I had announced a decision to live with my boyfriend but I had not foreseen such anger over this trivial matter.

It’s not that I take my finances lightly. I know where I stand and I don’t like the view. I currently bring home $845 per week. My mortgage repayments have crept up to $970.50 per fortnight. In other words, my minimum mortgage repayment eats up 57% of my income. Any scraps that I save are funnelled into my loan and if I access these savings, I will be hit with a $50 withdrawal fee.

While there’s a good chance that the RBA will cut rates or keep them on hold, if there is a rate rise due to inflation, my minimum mortgage repayment may command an uncomfortable 60-70% of my income. Whatever happens, I will still have to account for an extra 0.17% p.a. when my honeymoon rate ends next year.

It doesn’t take a business degree to realise that I need a loan that better suits my needs, one that gives me access to my savings via a no-fee withdrawal option or an offset account. Like many mustbethrifty mortgagers who’ve been hurt by the rate hikes of 2009-2010, I also crave for a loan that offers me security, not just flexibility.

In the last few days, CBA, WestpacNAB and ANZ have all slashed their fixed rates. Mum, when I told you that my refinance application had been approved and I was looking over the contract, you told me not to sign anything. You thought I was acting like an impulsive shopper at a 15%-off shoe sale. Burdened by sales fatigue and tales of economic woe, you wanted me to wait for a 50% mark down on that smart pair of heels. Well, Mum, it’s a matter of need, not want: my current shoes are falling apart and I dare not wait around while the store runs out of my size.

22 years and 6 months to go,

M.

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