How can you benefit from record low interest rates? By William de Ora

Your starting point is to clarify whether or not you feel there’s value for money to dedicate a few hours of your time to review what benefits you could reap from this record low interest rate. Maybe, and just a maybe, what if the Reserve Bank was on your side – how might you take advantage of this decision? If you see value in this then here’s what’s next.
Step One: make a decision to reconnect with your accountant, mortgage broker, financial advisors – whoever is on your financial management team, and begin the conversation about consolidating any existing loans, and seek their advice about how to take advantage of these current conditions and build a long-term financial strategy.
Step Two: if any of your advisors want to keep the status quo, and not make any changes, then seek a second opinion. Your financial future is your responsibility so begin to put your best interests ahead of what’s considered easy or not seen as a priority.
Step Three:use the low interest rates to your advantage.

Consolidate and reduce your debts

Consolidating is a type of refinancing that usually means getting a new loan to pay out a number of other loans. Any good mortgage broker will advise you on how best to maximise your borrowing capacity.

In looking at how to consolidate your finances, the best place to start is to take stock of where you are. List out all your current debts. Then, look at what your most expensive high interest debts are such as credit cards, and personal loans. Imagine the money you might save by getting a consolidation loan, with a lower interest rate, to pay off debts.
What’s important is that you find out from your broker if you are in a position to refinance your mortgage to consolidate your high-interest debts.Because, by refinancing you may find there are better ways to use money.

Building your wealth

If you’re reading this article, then I’m thinking you are interested in building wealth correct? At the same time, you may be trapped in a mindset of “I can’t afford to invest at this time.”
Well, today’s interest rates make investing that much more affordable, and manageable for many people. The shift that needs to occur is the way you think and have a mindset that says, “I can afford to invest, and I will explores all avenues about how I can build my wealth.” This isn’t just about positive psychology or hype – this is about your future and gaining the maximum leverage out of your efforts.

With such low interest rates on mortgages, this is your opportunity to think about using your home loan to build wealth by leveraging investments. The secret to building wealth is using the equity that you have already built up in your property to assist you to invest in an asset that appreciates in value.

By looking to invest in neutral to positive cash flow investments there are many benefits in terms of your investment strategy.The house essentially pays for itself – with money left over. These types of real estate opportunities increase your serviceability, making you more attractive to banks and lenders. In short, if you can find the right investment property, and increase your income you are able to borrow more.

However, in making the time to review your current circumstances, it’s also prudent to ensure that you have a strong plan for the future to adjust, accommodate, and work with any potential rate rises. Considering and planning for all possible scenarios is just wise management.

Some day one day, you will need more than your job to generate your income. Therefore, if ever there was a time to rethink how you’re managing your money, and having your money work for you, hopefully it’s now.I encourage you to set aside some time as a priority so that you can find out how to create a future that truly works for you.

The writer is the founder of www.IPNA.com.au—Investment Property for New Australians. He was born in Sri Lanka and is a best selling co-author of three business books