Even though the RBA didn’t cut the cash rate today, borrowers can save themselves about $100,000 by choosing a cheaper home loan, according to 2015 Home Lender of the Year, loans.com.au.'
Loans.com.au Pty Ltd Managing Director, Marie Mortimer, said there was approximately 1.55 percent difference between comparable products on the higher and lower ends of the home loan interest rate spectrum.
“The big four banks offer variable interest rates around 5.59 percent, and loans.com.au’s rate is 4.04 percent,” Ms Mortimer said.
“That means a loans.com.au customer would save approximately $280 a month in interest repayments, which works out to a whopping $101,219 over the life of a $300,000 home loan.
“That amount of money could put a home owner well on the way towards owning an investment property in that time, making extra contributions to their superannuation, or building a significant investment portfolio.”
After Tuesday’s announcement that the cash rate would remain steady at 2.0 percent in July, many economic observers speculate there may be more movement of the cash rate before the year is out.
“Home loan customers don’t need to wait another month to see what the RBA’s next move will be, they can take action now to start saving money on interest,” Ms Mortimer said.
“Regardless of what the RBA does with the cash rate, borrowers should still secure the lowest possible interest rate for their home loan.
“The savings are significant enough to provide a big boost to a home owner’s financial future.”
Over a 30-year loan term, there would be many interest rate fluctuations and borrowers should take into account the cost of a higher interest rate over the duration of their loan.
“Over the life of a home loan there are periods where interest rates are going to be high, and other times when they will be low,” Ms Mortimer said.
“The key to minimising the interest you pay is to secure a low interest rate from the outset and pay down the loan principal so the effects of interest rate rises are not so pronounced.”