Reducing Interest Rate
Disclaimer: This information is general in nature and has not taken into account your personal financial position or objectives. Before proceeding please refer to a licensed adviser or tax agent and relevant PDS for product details before proceeding.
Reducing interest rate
Having a house or a home in Australia is a dream achieved. Owning a house in Australia is not easy. You need to know some of the processes that you may need to complete and also the type of mortgages available in Australia. There are various types of mortgage in Australia such as fixed rate, variable rate (which will change according to the available rates), the hybrid type which is usually discounted at first. Therefore, you notice that there are sometimes the rates decrease. Sometimes, the offers will also depend on the fact whether a person is buying a house or property for the first time or it is for the second time.
While looking for a mortgage in Australia, you can go directly to a bank or look out for a broker. A broker will help you especially when you don’t have a lot of information on mortgage properties. A broker will guide you in finding the best thing for you and he is aware of many policies regarding the mortgage. While acquiring a mortgage in Australia, it is important to understand some of the ways that you can use to lower interest rate on your mortgage. They are well described in this article.
How reducing the interest rate
Buying or acquiring a home in Australia is not a very easy process as it requires quite a good amount of capital. Therefore, it is important to understand various ways or methods you can use to reduce the cost of doing the process. It is very important you understand some of the available ways to finance your mortgage. You are also required to understand some of the available interest rates and policies available regarding lowering your interest rate. Check out on these methods.
Maintaining a good credit score
It is very important to understand that a high credit score is important in helping you get a favor of enjoying a lower interest rate. This is because to determine whether you are worth credit, many lenders check on your score and if you score highly there will be no doubts about your ability to repay them back. Usually, a higher score will make you be charged a higher interest rate. Therefore, it is very easy to ensure you enjoy a low-interest rate by maintaining a high credit score.
Maintaining a consistent work history
You can imagine that you have a high credit score and at the same time have a work history which is consistent. This will definitely put you at an advantage of enjoying a lower interest rate compared to when you don’t have a good work history. You will have more advantage if you have maintained your working place and having an income which has been growing over time. This is because your lender is likely to be satisfied by your ability to repay back which means you are likely to enjoy a lower interest rate in such a situation. When lenders find out that you have been constantly changing jobs from one place to another, the lender will be reluctant to give you a loan as this will mean that your income is stable.
Shopping around to get the lowest rates
It has been shown that one of the methods of getting the lowest rates is by shopping around. This has been made a bit smoother because someone can utilize the internet to get the best rates. Use of credit unions might be better in this because they are likely to give better rates.
Asking for a better rate from the bank
You could try this method of asking your bank for a lower rate. However, you can get a ‘NO ` answer. To get this advantage, you should have a high credit score of about 800 and above. In this way, you are likely to be allowed a lower interest rate by your lender. This is because your lender is likely to listen more to people with very high credit scores.
Plan to use more money
It is very important to note that the more money you borrow the lower interest rate you will enjoy. This is because banks are likely to charge more interest rate on little capital in order to earn more whereas they will just need to charge a lower rate in situations whereby you are borrowing more money. Therefore, deciding to use more money will help you to save many dollars at the end.
Shorten the period of your loan
One way of reducing your interest rate is by shortening the duration that you want to repay your loan. Banks are likely to reduce your interest rate if you will repay the loan within the shortest time possible. Therefore, having a mortgage of 15 years is likely to attract a lesser rate compared to a mortgage of 30 years.
Choose variable rate mortgage v fixed –rate mortgage
Whenever you want to acquire a home you need to consider the type of mortgage you want to acquire. There are various types of mortgage. Therefore, you will have an advantage when you choose a mortgage with a variable rate compared to choosing a fixed-rate mortgage. An adjustable mortgage has been shown to give buyers an advantage of enjoying a lower rate for some years. This is known as a teaser rate and it will offer you lots of advantages.