Do you have a mortgage? What’s the current interest rate you’re paying? Are you coming to the end of your fixed interest rate period for your loan? If you’re paying more than 5.5 per cent, and definitely more than 6 per cent, you should be looking around for a better deal. Here are three tips to help you save thousands of dollars over the life of your loan.
1) Talk to your current provider. Ring your lender up and tell them you’re thinking of going elsewhere. Often this statement alone will be enough to make them drop your interest rate. It’s best to research what else is on offer, as if you tell the bank what you could get somewhere else, they may try and equal or better it.
2) Be prepared to remortgage. The exit fees for remortgaging your home loan these days are a lot better than they used to be and should be non-existent in most cases, although fixed rate loans will often still charge them. So if you do find a better rate elsewhere, be prepared to move. The difference between a 5.5 per cent rate and a 6 per cent rate on a $500,000 home loan over 20 years could be over $34,000.
3) Refinance using a commission rebate service like YourShare. Rebate service providers have mortgage brokers that offer the same extensive suite of products that you can get elsewhere. However, unlike other mortgage providers, theirs are not swayed by the commissions they could receive, so they will always recommend the most appropriate product.
Not only will you get the cheapest and the best product for your needs, but if you use a commission rebate service, you will also get a cheque in the mail once a year. The commission on your home loan might be just 0.2% but that could still add up to $1000 a year on the $500,000 home loan we mentioned above, which is not an insignificant sum.