Compare Your Interest Rate With Prevailing Rates In The Market

If you have not researched enough for the prevailing rate quotes in the market before taking a loan there is a risk that you may be overpaying interest on your housing loan. The interest rates have declined and if you are bearing an interest rate more than 3.5 per cent you are one of those borrowers caught under the web of high interest rates. Under such circumstances it will be sensible for you to consider refinancing your loan to benefit from interest savings.

Many banks have recently introduced housing loan packages with interest rates pegged to Sibor or SOR for increasing transparency in rate quotes. In the past it was found that whenever the Reserve bank declared a decline in interest rates the banks tried hard to ignore the issue and kept on levying the previous rates on borrowers. However, with such packages the banks are hindered to do so as the interest rate will be adjusted automatically with the inter-bank rates moving up or down; it is no more at banks' discretion at all.


To play safe during the loan term choose a loan package that allows you a free loan conversion anytime so that you can switch over to a better deal. In Australia, people usually apply for home loans through a mortgage broker rather than go directly to the bank.


If your lending institution is not agreeing on rectifying its error, step ahead to correct rates by way of refinancing. The banks are responsible to provide you with total clarity in their interest rate structure. They cannot charge rates on you unreasonably high to achieve their profit targets.


Keep monitoring your loan viability and act if you doubt that you may be paying more interest rate than you should. It will be purely a waste of time and money if you are paying excess than the necessary rates on your loan. Compare your interest rate with prevailing rates in the market at regular intervals.



About the Author
Max is a Mortgage Broker who has specialized in no deposit home loans for over 5 years. http://www.homeloanexperts.com.au