When looking for a good deal on a home loan, the interest rate matters. A home loan is a long-term debt, so even a small difference in interest adds up over time.
Know What Your Interest Rate Is
The first thing that you need to do is to know your current interest rate. You may get the information from your online banking, including the loan product and interest rate.
Compare Interest Rate and Consider All Lenders
Nowadays there are a lot more lenders and financial institutions available in the market, and that allows you to have more options and choices when it comes to loan products. However, they may not be suitable to your unique situation, as some of the products you see online may have very specific lending criteria.
Check Your Credit Rating
Lenders do prefer borrowers who have reliable credit records, stable employment, evidence of savings, and strong debt-repaying ability. If you have a not-so-good credit rating, try to improve that. As this will give you a good chance at securing a lower interest rate and saving extra dollars.
Lower Your LVR and Negotiate with Your Bank
A low LVR will strengthen your position and can help you secure a lower interest rate. Lenders may charge borrowers LMI if LVR is above 80%. So growing your deposit to 20% or more can help you to get a better rate.
In general, new to bank customers are getting a better rate than existing customers. Ask your bank for the same home loan rate that new customers get. And also remember there is nothing to stop you from switching to another bank with a better deal.
Take Advantage of Base Variable Rate and P&I Repayment
If you have enough cash flow, then choosing Principal & Interest repayment will give you a lower interest rate, compared to Interest Only repayment.
And also, even though most banks increased the fixed rate in the last few months, some banks actually decreased their base variable loan interest rate. Choosing the right bank's product could potentially save you lots.
Apply Through Your Mortgage Broker
Some lenders may allow you to apply mortgage online, and others will need you to go into a branch. In any case, you can still learn about all loan products through your mortgage broker, which is a good way to find the best interest rate for yourself.
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