Existing home loan holders and those looking to take out new home loans are urged to shop around for a competitive home loan rate, especially now that the Reserve Bank of Australia (RBA) has left the official cash rate on hold.
Gavin Slater, National Australia Bank (NAB) group executive, says that the mortgage market is now one of the most competitive in history. This provides home buyers with what can be defined as an ideal environment for home buying. According to Slater, the NAB is helping to drive competition with lower interest rates and this is having a positive effect on the mortgage industry, with all customers gaining from the changes.
Banks Have Announced Rate Cuts
Westpac, Suncorp, Advantage and Citibank have announced rate cuts. Furthermore, NAB recently cut their 4-year fixed rate home loan by 0.20 percent to 5.44 percent. The lowest it’s been in 20-years. Whereas, the bank’s 3-year fixed rate is now 5.14 percent. This is encouraging many home loan holders to take advantage of the lower interest rates with many electing to go for a fixed rate home loan.
Of course, while fixed rate home loans offer you an excellent way to save on your mortgage repayments, if you’re going to stay in your home long-term, they can burn a hole in your back pocket if you’re talking short-term commitment. This is why it’s important for you to consider your own personal circumstances, your future plans and all the costs associated with changing home loans, before making the switch. If you neglect to do your homework before locking into a fixed rate then you could be forking out thousands in fees.
Taking Advantage of Competitive Home Loan Rates
To take advantage of competitive home loan rates, you firstly need to carry out a mortgage comparison. You can do this by looking critically at your existing home loan, and then comparing this to others on the market. Then work out how much you can possibly save by switching from your current home loan to the new home loan rate. If the saving is minimal, over the term of your loan, then you may be better-off staying with your existing lender. But, if you can save yourself thousands, then it is time to negotiate.
Before you sign-up for a new home loan, approach your existing lender. Let them know that you are considering making changes to your home loan and then provide them with the details of comparison home loans. Ask your existing lender if they can match this home loan in terms of interest rates and features.
Of course, if you’re unsure of your future plans and you’re thinking of selling, then it is suggested that you leave your home loan as it is. This gives you greater flexibility and helps you to avoid paying additional costs.
Are you looking for a cost-effective variable or fixed rate home loan? Then contact eChoice and find the right home loan for YOU today.
Written by eChoice