We knew that it was bound to happen at some stage and now here we are – interest rates are now moving in an upward direction. Many lenders, including the majors have announced increases on their standard variable rates, with the possibility that there may be more to come.
There are simple ways to mitigate any increases in your monthly home loan repayments, the first one being staying educated on what your rate is and how the increases effect your position. The second is having an experienced mortgage broker in you corner who will guide you as to what interest saving options may be available to you.
Some of the potential avenues to help you save on your home loan include:
A Pricing Request with Your Lender
The first port of call should always be getting your broker to do a pricing request with your lender to see what they will offer in the interest of retaining your business. In most cases they will usually shave something off your current rate, depending on how it currently fares in the market.
A Product Switch to a Cheaper Rate
Your product may not be as cost effective as another offered by your lender. Your mortgage broker will be able to run through other lending products that may be suitable and still save you money. In the current market, fixed rates are often a financially savvy alternative to their variable counterparts and you can even opt to fix only part of your lending if you still need the flexibility of a variable product.
Consider Paying Principal on Investment
In the past, investment lending has primarily been structured as interest only, to allow the benefits of negative gearing and for home owners to concentrate on paying down owner occupied debt. With the way interest only loans are now priced, it is in many cases more financially savvy to opt for principal and interest repayments as the interest being charged is less and the debt position is being reduced. Your accountant or financial planner will be able to advise if this is the right strategy for you.
Refinance to an Alternate Lender
Once the verdict is in from your existing lender with regards to what their best offer is, its then possible to compare that with the rest of the market. Your mortgage broker will be able to present other options from lending competitors and you can decide if refinancing is worthwhile.
Taking the time to review your options will most likely result in some form of saving, or at the very least, peace of mind that you have a competitive rate and product with your finances being on track. Your Blackburne Mortgage Broking team is always on hand to help you save money on your home loan and partner with you to reach your wealth creation goals.