After an unstable year, 2021 could be the right time to get a more reasonable interest rate for your home loan. With interest rates at record lows, lenders are vying with each other to claim and keep borrowers. So, your options of finding a right home loan deal are looking fairly good.
Like many Australians, you might have been financially crushed after COVID-19, so it’s a good time to see how much can save on your mortgage. In this article, Melbourne Mortgage Brokers, go through some home loan hacks to get into the New Year for lower interest rate and save on home loan in 2021.
1. Make the most of low interest rates available.
With interest rates at historical lows, there’s a good opportunity that you could find a better interest rate on home loan. In certain, if you haven’t refinanced home loan in last 18 months, you could be paying too a lot.
Compare your current rate of interest to other home loan rates out there and see if yours is still viable. With rates being so low, a bit to consider is fixing your interest rate. This would lock in an existing competitive interest rate for the following 1-5 years.
A fixed interest rate is somewhat that borrowers pursuing stability may be interested in. It implies that for the fixed period, your interest rate won’t go up or put down. Plus, since you’ll know precisely how much you be grateful each month, you’ll find accounting easier.
But, as the RBA have indicated that they don’t plan to increase the cash rate for another 3 years to assistance with post-pandemic recovery, a variable interest rate is yet an option to think.
2. Negotiate with Your Current Lender.
Before you go exploring at what interest rates other banks are proposing, be sure to check with your existing lender. Catch on what rates they’re offering to new clients. If rates are lower, call them up and request them for a lower rate.
Here are our tips for negotiating a lower interest rate:
• You can request them for the same rate they offer to new customers.
• Do some research and showing your lender that you know you could get a nicer deal.
• Use your loyalty as a negotiating tool.
• Be insistently eager to move on to a new lender.
• Prove yourself to be a standard borrower with great credit, at least 20% equity, on-time reimbursements, and stable employment.
3. Improve up your credit history.
Lenders will always be checking your credit history to decide how uncertain it will be to give you a loan. If you have a sequence of late repayments, fail to pay, and credit surveys, they will likely recognize you as high risk and your expectations of being approved for a low-rate home loan.
If you do have a lower credit score, it doesn’t mean that you won’t be proficient to get a new mortgage at all. There are field lenders who provide loans to poor credit debtors, but these loans will typically with higher interest rates.
If you want to boost your chances of getting your ideal home loan, spend some time increasing your credit score. You can ask to your home loan mortgage broker for any assistance.
4.Don’t Modify Your Repayment amount.
When you’ve guaranteed a lower interest rate, it might be enticing to reduce your repayment total to match up the principal and interest reimbursements you made with your greater interest rate. If you want to pay off your mortgage quicker, avoid doing this.
5. Pay low interest with an offset account or redraw facility.
While the initial step to saving on interest is making a lower interest rate, you could also look into set up an offset account or redraw facility. You may now be paying rates for an offset or redraw, so it’s crucial to check first. If you are, either one contact to your lender to cancel them, or help you to lower the interest you are paying right now. An offset account is a type of savings account which linked to your mortgage.
Got a home loan question? Just ask!
If you are still looking to get best interest rate on your first home loan. Get free expert advice at 7Mortgages in Melbourne. Feel Free to call us 03 9544 2642 or contact us.