The average mortgage costs roughly an extra $600,000 due to the rate rises over the past year or so ($600K over 30yrs at roughly a 4% increase)…
Compounding interest can be a real kick in the guts. If it’s in the banks favour, it costs us a fortune.
But compounding interest can also work for you, not against you. It’s just simple maths…
One rate cut of 0.25% could save over $88,000 off the average Australian mortgage…
Explained in this little 1 minute video, the compounding effect of a small interest rate cut:
If you want to do your own negotiations for a rate cut with your lender, you need to call them and do some preparation before calling.
This should help…
4 things you need to negotiate a rate cut on your home loan
FFS, your broker should be doing this for you. But if you don’t have one, just contact us or call your banks home loan department. We do this at least twice per year for all our clients plus adhoc on request.
Be prepared and arm yourself with these four things so you can make a compelling case for a lower interest rate:
- Your lenders best rate for new customers right now.
- Your property loan to value ratio (LVR). You’ll need total loan amount and property value’s so you can calculate your loan ratio as this directly impacts the interest rate offered.
- Competitor offer – pick one lender and know the product and rate for your LVR and make sure you know you can argue with your lender that it’s a comparable product to what you have.
- Your current loan interest rate (sounds stupid, but most people don’t know their own interest rate) .
Articles and other things I thought you’d like because you’re interested in some things sometimes…
Deal of the week:
1% assessment buffer for refinances. If you’ve been declined a refinance or better deal because you can’t afford the loan, maybe you can with a reduction from the 3% buffer. To add context, it could mean the difference of about $100-150K in maximum loan amount on an average mortgage.
Could interest rates be at their peak in Australia?
An interesting article here makes a good case, explaining that when compared globally, Australians have copped much harder and faster rate rises due to a much higher percentage of variable rate home loans when compared to other countries.
A book almost too good for words
The Untethered Soul. If you go deep on the content, this book can be lifechanging and help you negotiate many of life’s obstacles, especially the small ones that pop up every day several times and have the potential for mini conflicts. So it just makes your life better from one moment to the next. Shout out to my mate Clare G for getting me in to the book club that introduced me to this book.
Important Economic Announcements from this week
Monday
- Building Approvals up 20.6% in May
- Private House Approvals up 0.9%
- Home Loans up 4%
- Investor Housing Finance up 6.2%
Tuesday
- RBA Interest Rate Decision – no change
- RBA Rate Statement
Wednesday
- Retail Sales up 0.7%
Thursday
- Exports up 4.4% in May
- Imports up 2.5% in May
- Trade Balance stronger than expected
Thank you for reading!
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