Nearly half of all Aussie home owners don’t know the exact interest rate on their home loan, and they could be losing thousands per year because of it, a new report has shown.
Only 46.5 per cent of Aussies know their current interest rate, and apathy appears to be increasing, with fewer Australians knowing their rate in 2020 compared to previous surveys, according to data from Mortgage Choice.
Borrowers aged 30 to 39 were the most likely to not know their interest rate, followed by those aged 50 to 59.
But being complacent is costing them.
In the past year alone, the official cash rate has dropped by 6.5 per cent, and many lenders are open to negotiating on rate reductions, chief executive officer of Mortgage Choice, Susan Mitchell said.
“Let's say your principal and interest rate is 3.99 per cent and shopping around with the help of a mortgage broker enables you to drop by 50 basis points to 3.49 per cent.
“On a 30-year home loan of $600,000, the savings could be in the vicinity of $170 per month,” she said.
That’s more than $2,000 per year.
"It's so important to know your interest rate because if you’ve been complacent the chances that you are paying too much are extremely high,” Mitchell said.
Mitchell added all borrowers who haven’t their loan reviewed in the last 24 months should speak to their broker or their lender to learn if they’re still in a competitive home loan.
And the New Year is a great time to do it.
"At this time of year many of us will start setting new fitness goals and find a personal trainer or sign up for online fitness classes,” she said.
“I urge any borrowers who may be neglecting their home loan to keep the same mindset when it comes to their financial wellbeing.”
Getting a broker could save you thousands
According to founder and CEO of The Remarkable Woman, Shivani Gopal, engaging the services of a mortgage broker could also save you thousands on your home loan repayments.
“One of the most significant benefits of working with a mortgage broker is their ability to find you the best rates,” Gopal said.
That’s largely because brokers work on a commission basis, which means they are results-driven.
“It is in the best interest of your mortgage broker to find you the best deal,” she said.
How do I renegotiate by home loan?
It’s still possible to negotiate your home loan by yourself, but Gopal said you must be armed with facts before you do so.
“Don’t ask your bank what the best rate they can offer you is. They won’t be inclined to reduce your rate. Instead, do your research on what other banks’ rates are and have these comparison rates on hand,” she said.
“When you do approach your bank, ask them to match the lowest of these rates you’ve uncovered.
“It’s your responsibility to know what other banks are offering so do the homework and you’ll reap the rewards.”