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

Posted on Friday, April 15, 2016 - 12:11

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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