8 Out Of 10 Aussies Are Paying More Interest On Home Loans

Contemplating to buy your own home? Availing a home loan is one of the toughest financial decisions probably you need to take. You may be parking your life long savings into the desired property and thus, reviewing the entire pool of options will lead you to make the right choice.

Loyalty is good, but does it always pay you or you pay more for it in the long run? Many customers are comfortable dealing with their traditional bank and thus do not undertake any research before signing documents for their home loan or commercial property loan. In the bargain, they are missing out on some highly competitive pricing and options available in the market.

1. Lock Your Rate:

Australia is witnessing a record of one of the lowest interest rates offerings. Thus, the borrowers have been compelled to alter their home loan option to a fixed rate instead of variable, of course if permissible case by case. In a reverse, many banks have begun offering highly competitive rates for a fixed mode than variable loan options.

2. How Banks are reacting?

In lieu of a better repayment option, many banks are reducing their fixed home loan rates to be competitive. However, they are restricting the customer with several caps such as prepayment fee or a break fee if one wants to switch.

3. Impact of US rates on Australian markets:

Australian domestic rates could follow US rates. However, the Reserve Bank of Australia (RBA) may be compelled to cut the rates once again if the local economy dips further

4. Parallel Loan Repayments:

It is often observed the customers immediately opt for car loans or credit card loans once their home loan has been approved. Repayments of multiple loans lay a stress on home loan repayments, thereby, extending the prepayment period.

5. Increase in Lifestyle Expenses:

The cost of living has been rising in Australia. Right from utility bills to maintaining a standard of sustenance, customers are finding it tricky planning their financial arrangements.

6. New Customers Vs Existing:

To keep the momentum growing along with business numbers, many banks lure new customers with attractive discounts, thereby, leaving the existing clients pay much more as per their commitments.

7. Fastest Interest Repayments:

The Reserve Bank of Australia has kept interest rates on hold for past 21 months. Despite the same, the cost of repaying a mortgage has been rising fastest in the last 7 years. This sign is largely attributed to reports about the “big four” banks exploiting their existing and loyal customers.

8. Dropping Home Prices:

While this is surely a welcome news for first home buyers, the existing ones servicing their home loans are finding it tougher to reap ROI on their investments. The housing stock is on the rise, while lenders are acting tougher with tighter regulations. This has sharply affected the investor’s belief in real estate speculation. Besides, only a hand few of Australians have been able to park sufficient amount of surplus after their monthly spending.

9. Talk to your Finance Adviser today:

While you may have adequate knowledge about loans and funding, it is always advisable to communicate with Your Finance Adviser. The expertise and current updates shared will be an advantage for you, before you take the most crucial decision of signing on the dotted line. At the end, the investment in ‘knowledge’ pays the best interest.