How can you get a better Interest Rate?
1. Save a bigger Deposit?
💰The greater the deposit you have for your purchase property, the lower the interest rate that the Lender will offer you. Lenders will tend to have higher interest rates for customers that borrow 95% of the value of their property versus a customer that needs to borrow 80%. This is all about risk to the Lenders and how likely it is that you may be unlikely to pay the Lender back.
2. Create more equity in your property?
🏠 If you purchased your house a few years ago, your property may have appreciated in value over time. As a result you may have created equity in your home which in turn may allow you to renegotiate with the bank a better Interest rate. For example, when you originally financed your home you may have owned 10% of your home, as the value of your property has increased you may now own 20% of that property which would allow you to negotiate a better Interest rate with your Lender.
3. Borrow More Money?
💸 Not always a practical answer but it is factual! Generally speaking, the bigger the amount of the loan, the lower the interest rate the bank generally offers. Lenders are in the business of borrowing money to make money, enticing you to borrow more with lower rates. Lenders have tiered rates available in the market depending on the amount of money you borrow. The more you borrow the lower the interest rate.
4. Improve your Credit score?
🏦 Lenders take into account your credit report and your credit score when assessing you for a loan, if you can improve this you will be able to get Loans at a better Interest rate. Things you can do to improve your credit score are: pay loans and bills on time, Keep track of credit commitments, if you move house update your contact details with the Lenders, talk to your credit provider if you are having trouble meeting repayments and keep track of your credit record.
5. Ask for a better deal?
💁♀️ Don’t be afraid to contact your Lender and ask for a better Interest Rate. Speak confidently and ask for the same rate that’s offered to new customers or ask them what the best rate they can offer you is? You could also look at a major competitor in the market and ask them to price match that interest rate. You might find the Lender will be willing to negotiate to keep you as their customer, provided you are in a strong position with no missed repayments and good conduct on your current Home Loan.
6. Borrow Money for your Home Loan rather than Investment Loan
🏘 Did you know that Investment Loans attract a higher interest rate from Lenders than does an owner occupied Home Loan? If you’ve moved into your investment property and it is now your home talk to your Lender about refinancing to an owner occupied loan and see how much you can save on your Interest rates and repayments.
7. Consider a Fixed Rate loan?
📉 Fixed Rate Loans often have a lower Interest rate than Variable Home Loans. A Fixed Interest rate stays the same for a set period (usually 1-5 years). The rate then goes to a variable interest rate at the end of this period or you can negotiate another fixed rate.
8. Work with a Mortgage Advisor.
🙋♀️ Talk to a professional and see what options are available to you. If you feel like you would like someone to help guide you with this process and review your current situation to see if it can be improved this could be an option for you. Mortgage Advisors can negotiate fees and charges and review and leverage current offers in the market on your behalf to get you the best deal.
There are plenty of avenues to consider when trying looking for a better rate with a Lender. If all else fails look to refinance with a new Lender as they will always be more negotiable when trying to win your business. If you would like more information please contact Julie at Greater Geelong Finance on 0437 095 312 or julie@greatergeelongfinance.com.au
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