Why it might make sense for you to switch home loans.
If you’re considering switching lenders, you’re probably most focused on securing a better interest rate, but there are other things to contemplate before you make a move.
Home loan rates have hit all-time lows after the Reserve Bank of Australia cut the cash rate to a new low of 0.10% in November 2020. Lenders are being prompted to reduce rates and are now competing fiercely for new business.
Unsure of where to start? Take into consideration your personal circumstances and decide what you want out of switching. Tell your current lender you are planning to switch to a cheaper loan offered by another lender – they may reduce the interest on your current loan.
Compare any loan they offer with other loans you’re researching. Some lenders will only refinance with a new 25 or 30-year loan term, meaning you may end up with a longer loan term than the years left to pay your current mortgage. If you do find a new lender, negotiate a loan with a similar length to your current one.
If you have less than 20% equity in your home, you might have to pay lender’s mortgage insurance, which could increase the cost of switching and potentially outweigh any savings you may make.
If you’re able to save a few hundred dollars a month, it could very well be worth the switch.
To find out more about how your home loan can affect your ability to buy, get in touch with St Trinity Property Group on (02) 9099 3412.
For a free financial health check, contact It’s Simple Finance
The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs.