Do something about getting lower interest rates on your home loan. It will probably save you $50-$100 per week.
That adds up to a LOT over 30 years. Well over $100,000.
Think about it this way… When you reach retirement and have $100,000 left on your mortgage – it could have been ZERO if you made the move.
I don’t know about you, but I’d prefer to convert a lower interest rate in to more retirement funds. That’s exactly what happens.
Why you must review your home loan now, and get lower interest rates
It’s quite a simple mathematic procedure….
A couple of years ago…
If you’ve had your loan for more than a year or two, you probably had a really good deal at the time.
You’d have got a 0.7% or 0.8% discount off your banks Standard variable rate (maybe you squeezed a little extra out), and it was pretty hard to beat (eg. If the banks Standard Variable rate was 5.5%, you’d have been getting a variable rate of around 4.7%).
If you conducted a review, you probably wouldn’t have refinanced.
What’s been happening?
The banks have been increasing home loan rates outside of the RBA announcements, a lot. If you’ve already got a loan, you know this – and you’re sick of getting those letters about your rate rises.
Correct? Of course.
And when the banks increase their rates outside of the RBA, what they’re doing is increasing their profit margin (they say, it’s because of the increase cost of funds – but they’re lying, or exaggerating, or both).
How do I know for certain they’re lying or exaggerating? It’s because of one little fact…
The lower interest rates that they’re offering to new customers right now, and the even lower interest rates being offered by their competitors.
All you need to do is this:
- look at the large variance between what your bank is offering on the Standard variable, compared to their basic variable loan.
It’s quite the difference.
IMPORTANT POINT: Even the advertised rates (as below) are not the banks best rates. We’re negotiating every day with banks like the ANZ to get much lower interest rates than they advertise.
Here’s ANZ’s example from today (16 May 2017):
If you want to see today’s rates, just go over here and do a search now and filter by your own bank to see their variance (then double check your rate by comparing to the lowest advertised plus… Don’t forget to remove the filter to compare to all banks).
Here’s what happened when I removed the ANZ Bank filter so you could see all loans:
This search was conducted at the same time, as the above ANZ search, on the morning of 16 May 2017. Search online to see the interest rates are available today.
Why is this happening?
Obviously banks have been loading their rates up for existing clients, but are prepared to offer new borrowers a much lower interest rate.
People are lazy, and they resist change. Banks know this, and take advantage of human nature…
They know that most people rarely check their home loan rate… They cop the rate rise, because they can’t be bothered making the effort… For a while.
Most of you don’t review your home loan, so you should at least talk to someone who can make it easy.