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How to save $3,565 on your home loan with this simple trick

·Personal Finance Editor
·2-min read
Aerial view of Melbourne suburb and Australian money being fanned out.
The majority of those who asked for a reduction to their variable rate got one, RateCity said. (Source: Getty)

Around 3 in 4 Aussies managed to secure a cheaper variable home loan rate by calling the bank and asking one question.

What did they do? They simply asked for a lower rate.

A recent RateCity survey found that over half of its respondents haggled with their bank for a lower rate - and 73 per cent were successful.

How much can you save on your home loan?

On a $500,000 balance with 25 years remaining, a rate reduction of 0.25 per cent could save the average mortgage holder $1,241 in interest after one year and $3,656 after three years, RateCity said

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market, RateCity said.

49 lenders have recently cut at least one variable rate in the past two months while only 10 lenders have hiked.

The RAB said The average existing customer variable rate is around 3.08 per cent.

Graph showing home loan savings estimates
(Source: RateCity)
Graph showing home loan savings estimates
(Source: RateCity)

RateCity research director, Sally Tindall, said while the RBA is not expected to move the cash rate any time soon, one phone call could potentially save the average variable rate mortgage holder thousands.

“Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,” she said.

“Before you call, check what rate your bank is giving new customers for the same home loan, but also find out what other lenders have on offer.”

Tindall said if you discover you are paying significantly more than a new customer, you should pick up the phone to ask the bank why.

“If you have a good track record of paying down your debt, and the bank thinks you might switch to a more competitive lender, they’re likely to play ball,” Tindall said.

“A lot of people think a handful of basis points won’t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years,” she said.

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