Making the Most of Low Interest Rates


It’s easy to become comfortable with your home loan over a long period of time. While this can be a good sign to show that you’re happy with the loan you have, it can also lead you to miss out on other things.

For instance, you might become a little lazy when it comes to reviewing the rate that you are on, and the features that come with your loan. Looking over your home loan every so often will give you the chance to save some money in the long-run, while also getting rid of unnecessary features that you don’t use.


Now is a great time to get out that fine-toothed comb of yours and run over your home loan.

The Reserve Bank of Australia made another reduction to the official cash rate at the beginning of August. These changes have resulted in many banks and lenders passing the reduction on, which means more savings for both buyers and home owners.

Through these lower interest rates, a number of things can happen. More people – such as first home buyers – are able to enter the property market because housing affordability has improved. It will also allow current homeowners to take advantage of the low rates through refinancing their home loans.

This has many benefits, as it means that you can take the opportunity to restructure your home loan to suit your current needs.

For instance, you could tie your mortgage down to a fixed interest rate over a three or five year period. This is a great option if you’re looking for a bit of consistency when it comes to loan repayments.

Another option is to restructure your loan payments so you can own your own home faster.

As an example, if you have a loan of $300,000 tied to an interest rate of 5.44% p.a. This would translate into monthly mortgage repayments of $1,692.

If you refinanced to a new lower rate of 4.94% p.a.* then your mortgage payments would be reduced down to $1,602. That’s a saving of $90 per month.

However, if you continued to pay $1,692 per month then you could save interest of $35,960 and reduce your loan term by three years and four months.

Think of what you could do with all of that extra money instead of paying interest.


While you’re giving your finances a refresher, you might want to take the opportunity to go through the features that your loan has to offer. If you choose to switch your home loan to another type, then there are likely going to be features that have been added onto it. Saving money on your home loan is about more than just low interest rates.

To pay off your loan faster, your mortgage broker can often negotiate some of the features that you won’t use and have them removed from your loan. If, for instance, you don’t think you will use repayment holidays or offset accounts, then why pay for them?

* Comparison rate 4.95%


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