With mortgage rates constantly changing, what was once the most suitable home loan for you may no longer be the case. Now the question is: how do you go about getting a better rate and when should you switch to another lender? It may sound like a complicated process, but this article will cover a 4-step method on how to obtain a favourable home loan rate with less hassle.
The first step is to know what your current interest rate is. If you’ve been paying off your mortgage for several years now, you might not remember it off the bat. Your bank should send you monthly statements that show your interest rate and how much time you have left to repay. If you are on a variable rate home loan, you might see a fluctuation of your rate throughout the loan. Depending on your bank, you may or may not be informed when this happens as banks communicate these rate changes differently.
The next step is to compare and research rates online. There are several sites like Finder, RateCity and Canstar that list and compare interest rates from various lenders. You should bear in mind that these are general interest rates and may have specific lending criteria such as a low loan to value ratio, or a minimum loan amount. If you require something more suitable for your situation, it is better to speak directly with a mortgage broker.
Once you’ve got an idea of the current market rate, it’s time to speak to your bank. In an attempt to make you stay, they might offer you a lower interest rate than what you’re currently on, but they usually won’t be able to give you the competitive rate that you’re after. It is normally the case that new customers receive a better rate than existing customers, about an average of 0.79% lower per annum, according to Canstar.
Now it’s time to put in an application! Be mindful that every time you apply to a different lender, it will reflect on your credit file. The risk with multiple applications is that it can reduce your chances of getting approved for future loans. Once approved, you will need to sign the new loan agreement. You should be able to complete this digitally, but depending on the lender, some will require you to post the agreement back to them or visit one of their branches to fulfil the documents.
An alternative step…
If you want a quicker method of putting in an application, then you could consider engaging a mortgage broker to apply on your behalf. A broker will be able to assist and walk you through the process from start to end while taking into consideration your individual circumstances, lender criteria, loan facilities and rates. This is especially beneficial if you want to have just one go-to person for your application, which will help reduce complications! Engaging a broker is also one of the ways to be sure you’re getting the best rate on the market. Brokers will continue to stay in touch with you throughout the lifetime of your loan to ensure you’re getting the best rate for your situation.
If you need help refinancing your home loan, the team at FutureNow Finance are here to help. We can advise on the best home loan rate for you and discuss a solution that suits you. Call 1300 013 730 or email email@example.com