With interest rates rising it’s a good time to take a close look at your mortgage to make sure you’re getting the best deal possible.
It’s very likely that you’ll find a better deal with another lender. While the big 4 banks have raised their interest rates, not all lenders have followed suit, and some are taking the opportunity to grab disaffected big 4 customers.
There are incentives and special deals for new customers that you can take advantage of including cash rewards and honeymoon rates.
The first step in this process, though, is to offer your current lender the chance to keep you on. If they can offer something special to a new customer, why shouldn’t they offer something to an existing customer? It certainly doesn’t hurt to ask.
Take a look at this mortgage switching calculator from Money Smart. mortgage switching calculator to compare the cost of changing your mortgage to a different interest rate.
When comparing loans interest rates are not the only place to look for savings. Check the annual home loan package fee and other ongoing fees like the monthly account fees and other admin costs. These can add up.
When leaving a lender, there are fees involved, however they are not as significant as the banks want you to think. It’s worthwhile doing the sums to see if another lender may have a better deal for you.
Remember saving the 20% deposit for your home, so that you could have a loan to value ratio (LVR) of 80%? If you have already paid off a good proportion of your mortgage your LVR and therefore your riskiness as a borrower will be low and with some lenders this can entitle you to a lower interest rate. Again, it doesn’t hurt to ask.
Another side effect of higher interest rates is that they will probably force house prices to decrease. If you’re in a strong position with your current mortgage you may want to take the opportunity to access the equity in your home loan to buy investment property.
If you’re interested in discussing your home loan, my colleague Sarah and I are both qualified mortgage brokers and we’d be happy to see how your mortgage situation could improve.
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