Before the recent Interest rate rise, I was speaking to a new client about a potential investment property purchase.
I asked him if he had reviewed his current home loan rate recently. He said a phrase I hear too often, “No, I haven’t looked at it for a while but I am sure it is ok”.
My first question to him was, “What is your definition of ok?”
“Well I think the rate is around 2.75%…” he replied.
Well, I can tell you that interest rate is not ok considering the home loan rate I use as my benchmark (before the recent rate rise) was 2.24%.
So I had my client check his rate and to his horror, his bank had been creeping his rate up over the last 18 months and it was now 3.19%!
I outlined I could obtain for him a rate of 2.24% which would result in a savings of around 25% on his mortgage payments and in this case the savings was $4,255 per year.
$4,255 per year! Imagine being in a position where you are paying to the bank $4,255 per year more than you needed to. No wonder their profits are in the billions!
It is fascinating how many families try to save money by changing health care or electricity providers but fail to realise that their biggest possible saving is literally staring them in the face.
Some clients don’t like the thought of re-financing as it is deemed a “hassle” – but remember, we are here to make that a streamlined and hassle-free process. And in some cases, a refinance can be avoided if we can have your current loan re-priced with your current lender.
Either way, with the recent rate rise (and more rises expected) it is vitally important you have the most competitive interest rate in the market.
You can also use tools like www.ratetracker.com.au to monitor your interest rate for you. If it is a trap you have fallen into once before, then it’s likely they’ll get you again.
Imagine giving the bank $4,255 a year more than you needed to. Unbelievable.
Let’s chat ASAP!