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.
Getting an interest rate reduction could help you save thousands of dollars in interest on your mortgage repayments in the long run.
Before you approach your lender to ask for a lower interest rate, it’s a great idea to do some prior research. Here’s what to do:
Compare your rate with 35+ Aussie banks & lenders in 30 seconds.
A 1% interest rate reduction can absolutely be worth it. Since most home loans are long term loans that last generally between 20 and 30 years, interest savings add up. Take a look at the table below to see how much a 0.5% and 1% interest rate can save you.
A $200 saving per month may seem insignificant, but that’s $2,400 in your pocket every year or $12,000 over 5 years!
|Loan amount||Interest rate||Loan term||Monthly loan repayment|
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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.
Negotiating a lower rate isn’t for everyone. If you aren’t confident in doing so, a mortgage broker can negotiate on your behalf.
Find out what your new repayments might be in seconds.
One of the reasons why a lender will charge a customer a higher rate is because that customer is deemed as high risk. So, you need to present yourself as the low risk, ideal borrower.
You can do this by:
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.
Choose a time for one of our Home Loan Specialists to call you.
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.
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here
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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