Do you currently know what interest rate you are being charged on your loan?
If the answer is NO, then …You are not alone as the majority of borrowers opt for a set and forget approach and in a stable interest rate environment this may have no effect as rates generally remain stable and so will your payment if you are on either a variable or fixed interest rate.
What action can you take?
Right now being in a rising interest rate environment with rates coming off historic lows to currently sitting at 2.35%, it’s not surprising Australians are calling up their bank or broker to see what can be done with their loan to save them money.
Refinancing is sometimes the answer with borrowers being able to access a sharper interest rate. Sometimes, other added loan will also help save money such as offset accounts or a split loan.
There are many banks who are now offering an added sweetener when a borrower refinances with them with some very generous cashbacks being offered.
You may also want to ask your lender if they can match the rates the are offering new customers as you may find you are paying a loyalty tax.
Some extra tips for handling the rise in rates.
- The best option is to have a competitive interest rate as we mentioned above however there are a few other things you could do to save some money.
- Using an offset account could help you lower your mortgage repayments, as the amount of money in the offset account offsets the balance on your home loan so in effect you pay less interest.
Hints for this are having your pay go into this account and parking any lump sums of cash in this account such as a tax return. - Having your loan reviewed by an expert regularly.
Keeping in touch with your bank or mortgage broker often to make sure you are on the most suitable product for your needs. The advantage of a broker is they have access to multiple lenders and are across all the options in the market.
