8 out of 10 Australians don’t know what interest rate they pay on their mortgage and if you’re one of them then it’s time to start paying attention. Until just recently you should have had a mortgage interest rate starting with a ‘3’. However, in recent weeks lenders have started to increase rates a little so finding a rate starting with a ‘3’ is getting a little harder but still possible. The key point is to make sure your ‘friendly’ lending institution isn’t taking you for a ride.

Interest rates have been at record lows and you need to be making sure the savings are being passed on to you. When it comes to your mortgage, you need to be proactive. I’ve never heard anyone say their lender rang them up to offer a better deal. The simple reality is that if you don’t ask, you don’t get. If you’re happy to continue paying whatever you’re paying then your lender will happily keep taking your money.

What does a little extra interest matter I hear you say? IT MATTERS A LOT!

On a 30-year mortgage of $350,000, the difference in repayments between paying 4.5% per annum in interest versus 3.9% per annum is only around $80 a month or $20 a week. However, over the life of the loan, that equates to around $36,000! That’s not pocket change.

Getting a better deal on your mortgage is an example of a win you can have with no change to your lifestyle. It doesn’t cost you a cent, it’s making you money.

So use your voice – demand a better deal. And if that doesn’t work, use your feet and take your business elsewhere.

Chances are your lender will firstly try and convince you of the benefits of the ‘extras’ your loan offers. However, it’s likely you can live without those for the price they are costing you. Once they know you’re serious they will almost always come to the party and give you a better deal as it’s much easier for them to keep you as a customer than it is to have to try and replace you.

THE PATH TO A BETTER DEAL:

1. Make sure you know what you’re currently paying.
2. Use comparison websites to see what the best rates are in the market.
3. Armed with that information, get in touch with your lender and demand a better deal.
4. If they can’t get close, take your business elsewhere.
5. Reap the long-term rewards of paying less interest on your loan.

CAUTION: Just be mindful that if you don’t yet have 20% equity in your home and you move to a different lender they will charge you lenders mortgage insurance which you will have already paid. In that instance focus on paying down your current loan as quickly as you can to establish that 20% equity and then shop around.

Your mortgage is one piece of the puzzle. Put all the pieces together by getting financial advice.

Cheers,

Daniel