Don’t wait for the RBA to save you money on your home loan

​​​With the Reserve Bank of Australia announcing a 0.25% cut in the official cash rate today, Australians are the real winners on this Melbourne Cup. But is 0.25% enough?

Probably not, and because of this, it is likely that there will be more reductions in the coming months.

It’s astounding that many Australian families are waiting for the RBA to react to market conditions so they benefit from cheaper rates on their home loans. A lot of our customers have refinanced recently from bigger banks where they have been paying an astronomical rate of interest, and by shopping around they have saved more than 1% per annum on their home loan. This is more than any RBA cash rate announcement could give you after today.

To put it in perspective, let’s say before RBA moved rates today you had a variable rate Principal & Interest loan of $300,000 with one of the major banks. You were on a variable rate of 7.81% per annum for a 30 year term. You would be paying $2,161 per month and $478,207 in interest payable over the life on the loan. Let’s say after the RBA announcement, your major bank decided to reduce their variable rates by 0.25%. You would save $50 per month and $18,614 in interest over the life of the loan.

Now let’s say before today, you came to loans.com.au and were on a rate of 6.69% per annum with our Dream Loan Express product. Even before the RBA moved rates you would save $228 per month and $82,024 of interest over the life of the loan. So without even waiting for the RBA, you would be way ahead by switching lenders.

The point is quite simple – don’t wait for the Reserve Bank of Australia to give you a better deal on your home loan! By changing to a more competitive lender, you will save a lot more money. This will free up the cash flow so you can have more freedom to do those things you dream of.


By Marie Mortimer. You can follow Marie on Google+

Image credit: Frits Ahlefeldt-Laurvig

 
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