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Why even a 0.5% interest rate change matters

By ,| 3 min read

Switching home loans is complicated right?


A 0.5% change in my rate doesn't matter right?

Wrong again!

The truth is that every percentage point increase in a home loan can potentially cost a homeowner tens of thousands of dollars over the life of their loan. The same goes in reverse, if there's a better rate out there, why are you paying your lender thousands more than you need to?

Your challenge: Add 0.5% onto your current rate

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Find out if you could pay less each month with Lendi. Get a comparison in minutes.

Myth #1: Switching home loans is complicated

Switching your home loan has gotten a lot easier in recent years. These days, loans can settle in as little as a month. Here at Lendi, we've created a streamlined process that means you can start saving sooner. To make it even easier, you can find out much you can save in as little as 30 seconds by answering a few questions here.

How much can you save by refinancing?

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Our Home Loan Specialists are here to answer all of your questions and provide free advice. Once you've chosen the right loan for your situation, you can apply completely online. That means no paperwork and no trips to the bank.

An extra 0.5% really adds up over 30 years

0.5% might seem like a small amount. It’s tiny. BUT, it could mean big savings or losses. The crux of the matter is that your home loan is a long loan. Often up to 30 years. A short loan of a few weeks, 0.5% isn’t as important. You don’t have as many repayments and there aren’t that many opportunities for interest to build up.

But since most borrowers pay their loan off over a 30 year term, 0.5% matters. Home loan interest is normally calculated daily and it compounds. If you have a home loan of 30 years, that’s 360 months and each month you might be paying a lot more than you need to be.

Learn more about reducing your monthly repayments with Lendi's comprehensive guide to home loan repayments.


Myth #2: 0.5% doesn't matter

Many people don't take much notice of small incremental interest rate rises of 0.1 here or there, but what these borrowers don't know is that they could be missing out on huge savings over the life of their loan.

Each percentage point can mean a lot of extra dollars missing from your bank account:

For example, on a loan of $400,000 a simple difference of 0.5% (dropping 4.3% to 3.8%) could mean a saving of over $41,600 over the life of a 30 year home loan. This means you could pay your loan off a lot faster.

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What next?

Shop around! If you see a better rate out there, go ahead and investigate. Do your research and find out if you can save. Remember to take any extra costs into account such as break fees and LMI.

To save time, chat to a Lendi Home Loan Specialist who can do the hard work for you. They can compare loans from nearly 40 different Australian lenders and find the right one for your specific circumstances.

How much can you save with an offset account?

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How much equity can you access?


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Want free expert advice?

If you’ve got a home loan question, just ask! Our Home Loan Specialists are happy to discuss accessing equity, financing a renovation, or help you get a better home loan. Schedule a callback today.

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.

Tags: refinance, compound interest, interest, low interest

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Important legal stuff
Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 25 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria. Top rates include lenders who are on our panel and are then defined by the circumstances provided by the borrower.
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