You know what though? Your current bank is counting on your apathy!
By reducing your home loan rate, it can save you literally tens of thousands of dollars over the life of your loan. Let’s look at a quick example.
Suppose you had a $500,000 home loan at 5.00%. Your monthly repayments would be $2,685, and over the life of a 30-year loan you’d be paying $966,278.92.
Imagine what would happen if you were able to reduce your home loan rate to 4%. Your monthly repayment would now be $2,387. I’m pretty sure that extra $298 per month would be appreciated, and no doubt it would be easily spent elsewhere, but when you look at it over a 30-year term, your total interest would reduce down to $859,347. That’s an incredible $106,931 less you would pay back over a thirty year loan. Better still, if you were to continue to pay the $2,685 you were paying on your old loan you would actually pay out your loan almost 6 years sooner, and the total interest costs would be $782,229, which over the thirty year term is a enormous saving of $184,049.
It is incredible to think your apathy could cost you $184,049, which is why your bank is not going to be in a hurry to tell you about this (or offer you a cheaper rate unsolicited).
Yes, there is a bit of paperwork involved to arrange for a refinance, and it might take you some precious time, but to think of what you could save by doing this. And remember, every dollar you don’t save is a dollar that is lining your lender’s pocket. This is why your current lender will never remind you to refinance when rates head south!
But hey, you’re not the only one. According to a recent Bank survey, 85% of homeowners don’t even know their current interest rate, and this enables the big lenders to make record profits year after year. And with recent changes to interest rates, 50% of those homeowners are paying considerably more than the current market rate.
This is where it is so important to contact a good mortgage broker. Someone who can provide you with great advice, has access to all the current rate offers from many different lenders, and can make the process as easy for you as possible.
Procrastinating on refinancing your home loan could see you miss out on some great offers. But every day you wait is another day you’re paying more than you have to. Guaranteed your current lender is happy about that!