First thing first – don’t assume this means you automatically have your lender’s best rate, or the best rate on the market for that matter! You can easily find out if you could be on a better rate and saving money on your home loan by checking your loanScore. Check your loanScore nowYou’re also probably wondering what all this means for you and your current home loan? Well, how this affects you will depend on the kind of rate you are on (fixed or variable) and which bank you’re with.
If you’re on a variable rate, your bank may cut rates in line with the official cash rate, giving you some reprieve on your home loan. You may find you get a nice drop in your weekly or monthly repayments. Lenders are not obliged to pass on rate cuts and many don’t. This is a good time to shop around and check your rate against others in the market. Just because your bank hasn’t passed on the rate cut doesn’t mean other banks won’t.
Being on a fixed rate means just what it sounds like – your rate is locked in for a certain amount of time. You may have chosen to lock in for 1 year, 3 years or 5 years – either way, if best home loan rates go up or down, your rate ain’t budging. While you might be resenting the fact that you’re now on a higher interest rate than some others advertised at the moment, there are a few things you can do:
Sometimes the break costs attached to a home loan are worth paying because the interest you’ll save by switching to a better rate covers the cost of breaking it. Ask your lender what the break costs would be and get UNO to help you do the math on whether it’s worth switching now or waiting ‘til the end of your loan term.
Your lender might send you a fixed rate review letter towards the end of your loan. Others automatically put you on a variable rate when your time is up. It’s a good time to review your rate and see what else is around. It’s always worth asking your lender for a better rate; other times you’ll get a more competitive deal by switching to another lender.
Many Australians don’t refinance out of loyalty to their current lender, or they just don’t have the time and even sometimes just out of simple dread of having to call their bank. UNO’s Active Home Loan Management service is founded on the principle of acting in the best interests of home loan customers. We’ll proactively manage your home loan on your behalf, so you don’t have to worry about seeming disloyal, or unclear of what to ask for or feel fearful of calling your bank. Let us do all that for you. Here’s an example of what might happen if you choose to refinance:
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