Mark Bouris: Six simple steps to save money on your home loan
Finance guru Mark Bouris has called on all Australians with a mortgage more than a year old to review the deal they are on, and take these steps immediately to avoid getting ripped off.
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Owner occupier borrowers should be paying an interest rate that is less than 2.8 per cent or otherwise take immediate action to get a better deal.
Yellow Brick Road’s executive director Mark Bouris said mortgage deals had never been as cheap and there were big savings to be made.
He urged all borrowers who have a loan for more than 12 months to check the rate they are paying to ensure they are not getting ripped off.
“Check your lender’s website and see what rates they are offering new customers and secondly check what your rate is,” Mr Bouris said.
“If the rate your lender is offering is less than what they are offering new borrowers ring your lender and say you want that rate.
“If they say “no” you have to indicate to them you are going to leave.”
Many owner occupier principal and interest loans are now within the two per cent range.
Financial services firm Canstar said the minimum owner occupier principal and interest rate is 2.19 per cent.
On a $300,000 30-year loan this would make monthly repayments $1148 and total interest paid over the loan term $109,500.
This compares to a rate of 3 per cent where the monthly repayments would be $1265 and total interest paid $155,300.
Mr Bouris said lenders are “chasing new borrowers every day” which made it a great time to seek out better deals.
The Reserve Bank of Australia’s deputy governor Guy Debelle said last week the central bank could adopt monetary easing policies which would result in the cash rate falling from a record low of 0.25 per cent to 0.1 per cent.
This could result in mortgage rates coming down even further.
The Mortgage and Finance Association of Australia’s chief executive officer Mike Felton said borrowers should perform “regular health checks on their mortgages”.
“For those with stable employment and a good credit history it is certainly worth keeping a close eye on what is available in the market,” he said.
“Consumers with stable credit profiles and a healthy amount of equity in the property can expect to find owner occupier variable rate loans with a 2 in front and some fixed rate loans in the low 2’s.”
He also urged borrowers to look at the fees and charges associated with their loans and see out to a mortgage broker if help with the process is needed.
MARK BOURIS'S TOP SIX STEPS
1. Check your mortgage interest rate.
2. Find out what your lender is offering new customers.
3. Phone up your lender and ask for the mortgage retention team.
4. Ask them for a better deal.
5. If they don’t drop your rate tell them you are going to leave.
6. Engage a mortgage broker to get a better offer.
Originally published as Mark Bouris: Six simple steps to save money on your home loan