At Lending Loop, we work with experts – like our mortgage and finance brokers – who are well-versed in the complexities of home loans. And being on the inside of the process means they’ve also gathered a few home loan secrets on how to get the best deal on your home loan and also manage it effectively.
Let’s dive in!
The Reserve Bank of Australia's recent decision to raise the cash rate by 0.25 percentage points to 4.35% marks a significant increase from April 2022. This change has notably affected Australian households, increasing the financial burden on homeowners and complicating the pursuit of new home loans.
Understanding the current financial situation will help you better understand the financial position a home loan might put you in, including increased payments, a more pressurised household budgets and steeper loan costs overall.
Timing is key in negotiating better rates. To put it simply, there are certain times when banks are more inclined to offer favourable rates to retain or attract customers. One example is when cash rates drop. Or you may be able to get a better deal at different times of the year. For example, summer is often a slower time of year for the residential property market and you may be able to get better pricing during that period.
Maximising the potential of offset accounts and redraw facilities can significantly impact your loan term. Offset accounts can drastically reduce your interest payments over time. And redraw facilities can give you fantastic flexibility to better manage your extra funds.
Check out online calculators which can help you understand and utilise these features more effectively.
At Lending Loop we always suggest that our customers conduct a yearly review of all financial commitments. Of course this financial health check should include home loans, but it should also go beyond and look at things like utility services and subscriptions, outstanding loans (such as automobile or personal) and everything else that is on your financial plate.
Understanding what you no longer need, or looking for better deals on your current obligations, can get you into a better financial position going forward. And any savings can be redirected to accelerate your home loan repayment.
Cancelling your redraw limit can remove the temptation of redrawing extra loan repayments. You’ll save money by forcing yourself to avoid unnecessary spending. While you’ll have less flexibility, any savings can be redirected to your home loan and you’ll lower your repayments and interest over time, which will lead to a faster loan payoff.
Monthly subscriptions can sneak up on you, adding in costs that you might struggle to see. But cutting out unused or unneeded subscriptions can free up funds each month. These can be used towards additional home loan repayments (aiding in quicker loan settlement and reduced interest costs) or can give you more cash generally.
Keeping an eye on your home's equity can unlock opportunities for better loan rates. As your equity rises, your loan-to-value (LVR) ratios lower as well. Lenders often offer more favourable terms for loans with lower LVRs.
Checking in on your home equity will ensure that you get the best deal.
Understanding lender appetites can help you find the right match for your specific situation. Each lender will have their own rules and procedures around how they assess a borrower. Some may view self-employed or business owners in a slightly better light, and if you fall in this category it can affect your borrowing capacity.
Our brokers can guide you to lenders best suited to your unique financial profile.
Your credit health is important. A solid credit score is the basis for getting a good deal on your home loan. You can maintain a good credit score by paying bills on time and reducing your debt overall. And remember to get good advice before applying for any loans. Each application – particularly if the application is not approved – can impact your credit score negatively.
When it comes time to apply for a loan, you’ll want to put in your strongest application to get the best deal. You’ll need to ensure all documentation is accurate and complete, and that you have met all the requirements of that particular lender and product. Getting an expert (like our team) to assist with your application will help you to present your strongest case to potential lenders.
When you’re looking to get the best deal on your home loan it pays to look beyond interest rates. Some features might offer long-term benefits that can pay off financially, but also in other ways, for example by giving you flexibility.
On the other hand, if you decide you don’t need certain features then getting a home loan without those extras might help you to get a better rate too.
Take a look around for any government schemes or incentives that might help you get a leg up on the property ladder. These types of schemes can significantly impact your loan terms or put you in a much better position to get a good home loan generally.
The home loan space can be complex. But you don’t have to navigate these complexities on your own.
At Lending Loop, our mortgage brokers are committed to helping you find the best solutions tailored to your needs. We’ll give you the expert advice you need to make informed decisions for a more secure financial future.