5 questions you must ask to yourself about your existing home loan

Published on December 4th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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If you wish to make sure that your home loan provides you with the best current interest rate, there’s one way of doing that. You just have to ask yourself these five questions to see if you’re getting the best deal out there or not.

When was the last time you checked your rate?

Statistics indicate that about one-third of Australian borrowers are not aware of the interest rate attached to their home loan. That would be because they assume that rate differences are rather insignificant in importance. Nonetheless, truth be told, even a slight rate change may have a positive impact on your finances in the long run. A difference of half a point, namely between a 5 percent and a 4.5 percent rate on a 25-year long $500,000 home loan might cost you about $43,000 additional interest. Thus, as you can see, checking your rate is extremely important.

What is the present average rate?

As a result of RBA’s recent decision of maintaining the cash rate on hold at 2 percent, many lenders provide borrowers with rates ranging from 4 to 4.5 percent on variable home loans. If you wish to stick to a fixed rate, you should anticipate paying more. Still, that should enable you to obtain a more attractive fixed rate, depending on the lender. Truthfully, the ideal way of comparing the latest average rates is by searching online for free interest rate comparison tables.

Should I ask my bank for a lower rate?

The loan interest rates are, at the moment, at the lowest point they have been in the last 50 years. That is why the present is the perfect timing for you to give your bank a call and ask for a more affordable rate. You might be inclined to assume that you’ll be offered low-interest rates without having to do anything, but that isn’t always true. Thus, if you believe that your home loan doesn’t reflect the current interest rate market situation, you should consider discussing this aspect with your bank. The greater majority of banks prefer negotiating than risking losing borrowers.

Are there other offers that would work for me?

Perhaps your home loan was a great deal a couple of years ago. But, that might have changed. Thus, it’s really worth the time and effort to do a bit of research and establish whether there are other offers that would work better for you. The very best variable rate loans provide borrowers with low rates and fees, as well as features such as an offset account and other facilities you might find useful.

When was the last time you consulted with a financial advisor?

And last, but not least, if you’re set on altering your home loan into a more attractive offer, you should make sure to discuss with your trusted financial advisor. By doing so, you will make sure that you have the best loan for your particular financial situation.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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