If you regularly compare your home loan interest rate to what’s out there on the market, you may come across better deals. Over the past couple of years, interest rates have fallen significantly, meaning that you could be paying more interest than you have to. Those on older loans who haven’t refinanced recently are more likely to be overpaying in interest.
Before you approach your lender to ask for a lower interest rate, it’s a great idea to do some prior research. If you head to your bank’s website, their current interest rates should be easy to find.
When comparing with your current rate, make sure to take into account the different ways interest rates are charged. While home loans with variable interest rates will typically have lower interest rates, fixed rate home loans afford more stability but at a higher interest rate.
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Consider what would be best for your lifestyle. The good thing about variable rate loans is that you have more flexibility when it comes to refinancing in the future, making extra repayments and having access to a wider range of loan features.
Many fixed rate home loans still allow you to make extra repayments, but they’ll be capped at a specific amount and fees can accumulate if you exceed this amount. If you like to know exactly how much you’ll be paying per month, a fixed rate loan is a good option because it isn’t subject to fluctuating interest rates.
It’s important not to assume that because you’ve stuck with a lender for a number of years that they will automatically reward you for your loyalty. In fact, many homeowners may be subject to a ‘loyalty tax’. This is where banks continue to charge existing customers high interest rates while offering low interest rates to new customers.
Despite the low RBA cash rate, lenders often don’t pass on rate cuts to existing customers. Just because your interest rate was good at the time you received your loan, doesn’t mean it is still competitive to this day.
Therefore, motivated homeowners would benefit from being assertive and requesting the same low interest rate that new customers get.
Lendi can help you compare your interest rate within seconds. See how much you could save here.
That’s not a problem. Lendi’s Home Loan Specialists are more than happy to negotiate on your behalf to ensure that you get an interest rate that is more competitive. Choose a time to chat with our experts here.
We can conduct a Same Lender Review to assess what your options are with your existing lender and whether it makes sense to stay or move on to a new lender.
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You don’t have to limit yourself to a single lender for the entire course of your home loan. If you can see other lenders offering better rates, refinancing could save you thousands. Lendi can help you make the switch and our Home Loan Specialists can offer you free expert advice.
If you are on a fixed rate loan, understand that refinancing before your fixed rate period is over could result in break costs and exit fees. Before you make the switch, ensure that the benefits of refinancing outweigh any costs associated. Fixed rate periods are usually only between 1-5 years, so sometimes it can make more sense to wait.
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
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