Interest rates have been a hot topic lately, and for good reason. Everyone wants to score the best interest rate. While rates have held steady for the past 12 months, something interesting is happening—lenders are dropping their rates. That’s right. Around 70 lenders have reduced their variable interest rates in the last year, and 17 lenders did so just last month. In fact, 34 lenders now offer variable rates below 6%!
But here’s the thing: to take advantage of these opportunities, you need to act. Here’s a simple, three-step guide to ensure you and your family secure the best interest rate possible.
Step 1: Do an Equity Check
Understanding your equity position is key to getting the best deal. The best rates are often reserved for borrowers with lower loan-to-value ratios (LVRs), which means having more equity in your property. For example, owner-occupiers with an LVR of less than 80% are usually eligible for the most competitive rates.
How do you check your equity? Reach out to your property mentor or financial adviser. They can help you assess your current position and ensure you’re in the best possible shape to negotiate a better deal.
Step 2: Negotiate with Your Lender
It might feel awkward, but picking up the phone and negotiating with your lender can save you thousands. Here’s a script to get you started:
Hi, I’ve noticed other lenders offering lower interest rates than what I’m currently paying. Before I consider switching, I’d like to know—what’s the best rate you can offer me?
Lenders often rely on customers being too busy or hesitant to ask for better deals. By simply making that call, you put yourself in a stronger position. Remember, every dollar counts, and lenders won’t hand out discounts unless you ask.
Step 3: Consider Refinancing
Here’s an unfortunate truth: banks don’t reward loyalty. Staying loyal to your lender could mean you’re paying more than you need to. Banks reserve their best rates for new customers, not existing ones.
If your current lender won’t budge on your rate, it’s time to explore refinancing. Switching to a lender offering better rates can save you a significant amount in interest payments over time.
To give you an idea, the lowest available variable rate in the market right now is 5.75%. How does that compare to what you’re paying? If your rate is higher, it’s worth investigating your refinancing options.
Take Control of Your Mortgage Today
The message is clear: staying on top of your mortgage rate is essential. Don’t let lenders benefit from your inaction. With a quick equity check, a call to your lender, or a move to refinance, you can ensure you’re not overpaying on your mortgage.
Remember, every small action you take today can lead to significant savings tomorrow. Take control, save money, and make your mortgage work for you!
