Why should I be comparing home loans right now?
Our circumstances are always changing. So, why should I be comparing home loans right now? We get new jobs, have kids, retire or become empty-nesters. Regularly reviewing your home loan can put money in your pocket and reduce financial stress. Or even pay off your loan sooner.
Research currently shows that less than 40% of Australians are confident they know enough about loans to have the right one for their situation. But they can mean paying too much each month.
When was the last time you checked out the home loan competition? And, what do you need to know before you start comparing home loans? How can you make sure you’re getting a good deal?
5 essential areas to look at when comparing home loans;
1) Understand your current rate
Knowing your current interest rate is the first step to comparing home loans and getting the best deal. You’ll also need to understand what the different rates mean.
2) A variable home loan interest rate fluctuates as the market changes. That’s great if rates drop, but can put pressure on your budget when they go up. An unpredictable mortgage repayment can also be hard to plan for. However, they’re often more flexible, with options to redraw, make extra repayments, or pay out early.
3) A fixed interest rate is one that locks in current interest rates for a set period, usually 1-5 years. That means no rate increases, so your repayment is always the same, but it also means no rate decreases. After the fixed period ends, you’ll need to either lock in a new fixed rate or revert to a variable rate. That’s a great opportunity to think about comparing home loans to make sure you’re getting the best deal.
4) You can also use a combination – a ‘split’ rate – paying a fixed rate on a portion of your loan and a variable rate on the rest.
5) ‘Set and forget’ can also cost you money!
Bank interest rates are informed by the Reserve Bank of Australia, which sets the ‘cash’ interest rate and reviews it monthly. When the rate changes, lenders can choose to pass on those increases or decreases to their customers.
Over time, your current rate can become totally out of sync with the RBA’s cash rates. Your faithful loan could be looking a little old-fashioned – and that could be costing you money! A home loan interest rate that’s been fixed for XXX years may mean a bigger mortgage payment for you. And, like any product, home loans are always evolving with new markets, new technology, new features and more. It always pays to have us look at your loan circumstances to see if you can be saving money or paying out your loan sooner.
Many lenders also offer sweeteners for new customers too. An introductory rate might save you heaps for the first couple of years, allowing you to put money away or repay faster while your mortgage is at its highest. Just make sure you know how much you’ll be up for when the honeymoon period ends.
Why should I be considering to refinance my home loan right now?
Refinancing is easier than you think
Don’t be afraid to refinance for a better offer . Technology has made the shift to a new lender much easier. We deal directly with your current bank to pay out your existing loan and transfer titles and security. Also, we help you speed up the process by having your paperwork ready to go, including your current mortgage information, proof of income, and identification.
We can show you how much you could be saving in the long run, while being clear about how your regular repayments will change. We can also help choose the best new transaccional and offset accounts to suit your unique requirements.
Of course, refinancing can come with its own costs, too. We are here to make sure you’ll be better off in the long run before you switch.
Now is the best time to shop around
The current home loan market is highly competitive, with offers to suit every kind of borrower. Home loans are more feature-rich than ever, and current interest rates are historically low. If you’ve been thinking about finding a better deal, don’t put it off any longer.
Every day you wait is money you’re paying in interest. There’s never been a better time to start comparing home loans. What will you do with the money you save?
Compare your current rate and talk to us about stress-free financing or refinancing.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.