RBA rates are on hold again, but there are ways to still save money

AUSTRALIA’s cash rate was left unchanged by the RBA today but that’s no reason to ignore what for many households is their largest monthly expense.

First homebuyers need to be wary of expenses. Picture: Thinkstock

AUSTRALIA’s official interest rate was kept on hold by the Reserve Bank today but that’s no reason to ignore what for many households is their largest monthly expense.

It was the twelfth consecutive RBA board meeting where the official rate has stayed at a record low 1.5 per cent and economists do not expect it to move any time soon.

Despite the RBA’s steady-as-she-goes approach, lenders have been aggressively adjusting their home loan interest rates in recent months amid tough competition and regulatory changes.

Spring is less than one week old, making now a good time to polish your mortgage and save money.

Here are some suggestions.

1 COMPARE YOUR RATE

Check your current mortgage rate and use some of the many online comparison sites to see how it stacks up against other lenders. If you have a good repayment history and are a low risk borrower, lenders will jump over themselves to get your business. Be prepared to play hardball with your existing bank.

2 CHECK YOUR STRUCTURE

If the rate is fine, the next step is to make sure your loan structure is working well for you. Does it offer redraw facilities to give you flexibility, or an offset account that enables all your spare cash to work against the loan principal until your spend it? There may be loan features that you are paying for that are not needed. It’s worth a quick look.

Australian homeowners need to keep track of mortgage rates. Picture: Supplied

3 FIND EXTRA CASH

The best way to make a mortgage debt disappear is to make extra repayments. Just $20 a week can shave years off the life of a loan and tens of thousands of dollars in interest costs. Check recent bank and credit card statements to see if you’ve been too gung-ho with any purchases that could be scaled back.

4 FIGHT FEES

Home loans can come with a pile of unnecessary fees, so check your latest statements to work out just what you are paying. If you’re not happy, get your lender to explain and demand a better deal. Many offer packages that come with an annual fee but carry big loan discounts. Just like getting a good interest rate, be prepared to be stern with your lender.

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Originally published as RBA rates are on hold again, but there are ways to still save money