Yesterday, Westpac became the first big bank to lift interest rates out-of-cycle. Effective 19 September, rates for variable interest rates for owner occupied and residential investment property loans will increase by 0.14%.
For borrowers, this rise will add an additional $420 a year to the interest bill of an average $400,000, principal and interest loan over a 30 year term.
The Westpac-owned Bank of Melbourne, BankSA, and St George Bank are expected to match the rate hike. It’s anticipated that other Big Four banks will follow suit.
“Switching to a better interest rate can save homeowners thousands of dollars each year. With changes in the market and fluctuating interest rates, it pays to get into the habit of reviewing your home loan from time to time.” says David Hyman, co-founder and managing director of Lendi.
6 Tips to get the most out of your home loan:
- For homeowners on interest only loans, if you can afford it, consider switching to principal and interest. You’ll pay less interest over the life of the loan and pay off your loan sooner.
- Consider an offset account - it’s a great way to reduce the amount of interest you pay on a home loan. It has the potential to save borrowers tens of thousands of dollars over their loan term.
- Consolidate expensive debts - like credit cards, personal and car loans into your home loan. Merging all debt into one repayment can help reduce the amount of interest that needs to be paid.
- Get the best of both worlds by splitting your home loan into a fixed and variable rate. This gives borrowers the stability of a fixed rate, while the variable portion offers the flexibility to make extra repayments and pay off your loan faster.
- Keep your credit score clean and ensure bills are paid on time. The new Comprehensive Credit Reporting scheme means that paying bills late can blemish your credit history for up to two years.
- Compare rates regularly - It can pay to shop around to make sure you're getting the best rate for your individual situation.
You can make sure you've got the most competitive rate in the market by comparing your home loan options, or choose a time to chat with a Home Loan Specialist here.
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