How Australians get home loans has changed a lot in the last ten years. Way back in 2010 most borrowers still had to queue in their local bank branch and fill out countless pages of paperwork just to apply for a loan. And then the waiting game with the bank began.
The good news is that today there are a lot more options available and thanks to technology, the home loan process has been transformed for the better. Australian banks and lenders are now offering some of the lowest home loan interest rates in history.
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We've rounded up our seven tips to securing a low interest rate and the perfect home loan deal for your needs in 2020.
One of the huge revelations of the last couple of years is that borrower loyalty does not pay off. Numerous studies have shown that borrowers who adapt a set and forget approach to their home loan will pay a lot more in interest over the life of their loan. Smart Aussie homeowners are regularly researching the market and comparing their rates with other lenders.
There are a lot more lenders and loan options available in the market in 2020 compared to even five years ago. And this is good news for borrowers. As each new online lender or neo bank enters the market the competition for customers becomes more fierce.
Following three RBA cash rate cuts in 2019, lenders of all sizes are offering record low interest rates. It’s worth considering all your options, smaller online lenders may be able to offer lower rates since they don’t need to fund local bank branches, while larger lenders may have a larger range of loan products to choose from. The point is more choice results in a better chance of finding a good loan fit for your individual needs.
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The quickest and most convenient way of finding the right loan for you is to compare home loans online. You can do this quickly using a digital home loan platform like Lendi. Plug in your details online and the system compares loans from over 35 lenders and 2,500 variables to give you a shortlist of options in seconds. And, unlike a standard comparison site, Lendi will only show you loans we think you are actually eligible for.
When it comes to securing a low interest rate, your credit rating plays a big role. Lenders want to know the borrowers they lend money to are reliable and good at paying their debts. If you have a less than stellar credit rating it’s worth focusing on improving it over the next few months to give yourself the best chance of getting a low interest rate and saving extra dollars throughout your loan term.
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Whether you’re planning on refinancing your loan or purchasing a new property, a low Loan to Value Ratio will always strengthen your position and can help you secure a lower interest rate from lenders. If you’re buying that means growing your deposit as much as possible. Lenders typically charge borrowers Lenders Mortgage Insurance (LMI) if their LVR is above 80% so it pays to aim towards saving a 20% deposit. If you’re looking to refinance you can lower your LVR by building your equity and making extra repayments.
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You give yourself the best chance of getting a low interest rate by being the perfect borrower. That means ensuring you have a clean credit file, a stable employment history (ideally not on probation), evidence of savings and no extravagant expenses. Like any credit provider, banks want to know that you can comfortably pay back your loan so they will review your expenses in detail to ensure you’re not overstretching yourself.
If your lender is offering a lower rate to new customers then call them up and negotiate. Ask your bank for the same home loan rate new customers get. If they’re unwilling to budge then nothing stopping you from switching to another lender with a better home loan deal. Mortgages last for 25-30 years so even a 0.5% rate change can result in huge savings.
So there you have it, the 7 ways to get a better home loan rate in 2020. If you have any home loan questions or want to see what low rates you may be eligible for, then jump on the Lendi platform or chat to a Home Loan Specialist here.
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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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