Why do you need to know your interest rate? Interest rates are a big factor in each repayment and the total cost over the life of a loan, so staying on top of your current rate as well as the interest trends across the market is essential.
By staying on top of interest rates, borrowers can make informed decisions about choosing a first-time home loan or getting a better rate by refinancing.
Interest rate percentages are based on a number of factors: The Reserve Bank, the cost of money on overseas markets, and the general state of the economy. Interest rates don’t appear to move by much when looked at as a simple number, sometimes only a fraction of a per cent (referred to as a basis point, which is equal to 0.01%), but each basis point makes a significant difference to the total cost of a loan and makes a big difference when you’re working to pay down your mortgage. While a few cents or dollars might not seem like much to get excited about, the way they compound over time can lead to significant benefits.
When you first lock in a home loan, you will choose a fixed or variable interest rate. A fixed rate does not change over a set period of time, and your payments will be predictable each pay cycle. On the other hand, a variable rate is attached to the market interest rate and will move up and down with the market.
Calculators are very useful to help you compare rates across fixed and variable loans, and translate the rates into an impact on monthly repayments, loan length and the total cost of a loan.
The best way to keep on top of movements for the interest rate is to stay in contact with your finance broker. They
will be able to help you shop around to find the best deal for refinancing when the time is right for you. As your broker will learn your
unique needs, goals and financial history, they’re in the perfect position to help you as these factors change over time.
You’ve scored the home of your dreams with the help of your finance broker and you’ve just popped the bubbly to celebrate. Congratulations! When the champagne bottle’s empty and you’ve settled in to your new home, you’ll notice your finance broker is still in your life, and you might wonder why – after all, they got you the loan that works for you and earned their commission. Why would they still care how you are going?
They know it’s a good idea to keep in touch every six to 12 months. After all, you should be reviewing your current loan every year and your finance broker can let you know how you’re tracking along.
Building a long-term relationship with your finance broker is a good idea as they will know the ins and outs of your circumstances and what you want for your future. Your finance broker will also stay on top of your account and, with expert industry knowledge, keep their ear to the ground for any new products or better interest rates that would benefit you, especially as the Reserve Bank makes updates and the economy shifts.
As well as expecting to hear from your finance broker every six to 12 months, there are a few times you should contact them. This is because if your life circumstances change, it may impact your mortgage.
For example, you may be welcoming a baby into your home, or finally receiving a higher salary, maybe your income may be temporarily reduced like many have during this pandemic, or you may decide to get married.
Otherwise, you may want to refinance to a better a deal or consolidate your debts. You may also want to access the equity that you have accumulated in your home for a renovation, an investment or a holiday, all of which your finance broker can help you with.
Even the most seasoned of investors benefit from staying in touch with their broker, who can help them maximise returns later down the track. And if you decide to invest in property for the first time, your finance broker can help look for investment loan options to get you.
Our friendly team at Acquired can be by your side long after the ink dries on your loan application, and help you understand how to secure the best interest rate for your mortgage. Most of all, we really do care and are invested in building long term connections with our clients to become people they trust. For a personalised service by people who care, start your journey with Acquired.