Many homeowners don’t realise they could be paying a higher interest rate than they need to.
A lot of people think their bank will automatically give them a better rate when rates change. Unfortunately, that’s not always the case.
In some situations, new customers can get a lower interest rate than existing customers at the same bank.
Why Does This Happen?
Banks do not give every customer the same interest rate.
When deciding what rate to offer, they look at things like:
- How much you owe on your home loan
- How much your property is worth
- Whether you are employed or self-employed
- How much equity you have in your home
- The type of customer they are trying to attract
Because of this, two people can apply for a loan with the same bank and receive different rates.
When Was the Last Time You Checked Your Rate?
Many people set up their home loan and then never think about it again.
The problem is that home loan rates change all the time.
A loan that was a great deal a few years ago may not be such a great deal today.
That’s why it’s important to review your home loan regularly.
What We Do for Our Clients
At Houses for Heroes, we review our clients’ interest rates after the first 12 months and then every six months after that.
We have a dedicated team member who helps with these reviews.
She checks:
- Your current loan balance
- The estimated value of your property
- How much equity you have
- Current rates available in the market
She then contacts the bank and asks if they can offer a lower rate.
Sometimes the bank says yes.
Sometimes the bank says no.
Every bank has different goals and different pricing rules.
Should You Stay or Move?
Sometimes your current bank will lower your rate and you can stay where you are.
Other times, another lender may offer a better deal.
The important thing is knowing your options before making a decision.
A lower interest rate could save you hundreds, or even thousands, of dollars each year.
What Can You Do Today?
If you haven’t checked your home loan rate in the last 12 months, now is a good time.
Call your bank and ask for a rate review.
You might be surprised at what they can offer.
Not sure what to say?
I’ve put together a simple phone script that you can use when speaking with your bank.
If you’d like a free copy, send me an email at dan@h4h.com.au and I’ll send it to you.
