The Reserve Bank of Australia (RBA) reduced their lending rate by 0.25% to 0.5% today. This change will result in the mortgage lenders (banks) adjusting their own mortgage rate that they charge customers. However, the extent of that reduction will vary from lender to lender and many will not pass on the full 0.25% reduction.
We spoke to Eghard Van der Hoven from Switch Finance as we know these differences can result in a significant financial cost.
Eghard pointed out “With interest rates coming down over the past year or so, what has become evident is that lenders often offer new customers sharper rates than what existing customers have. This means that customers who have not reviewed their mortgage rate in the last year or so will most probably be charged a higher rate than what is available in the market”.
“For example, if you have a mortgage of $500,000 and your rate is 0.50% higher than where it should be, then, by refinancing, you could be saving $2500 pa. This equates to $75,000 of savings over the life of a 30-yr. loan. Often these differences can be as high as 1% resulting in even greater savings. This is the LAZY TAX that many people are ‘paying’ for not taking a few minutes with a professional, to assess their current interest rate and refinance if required.”
We are always looking at easy ways to save you money so that you can either add more to your Super, help pay down your mortgage quicker or just go on a well deserved holiday. Therefore If you haven’t reviewed your mortgage in the last couple of years please give Eghard from Switch Finance a call on 0409 881 817 for an obligation free assessment of your current position.