The Reserve Bank has made a move by raising its official cash rate last month and it affects bank interest rates, including mortgage rates. So what can you do about it?
When the Reserve Bank raised the basic interest rate to 4.75% , it immediately kicked the major lenders into gear to follow suit. That means interest rates are rising- and that definitely affects you if your are in the market to buy a home. Is there anything you can do about it or are you simply subject to the higher interest rates without any recourse?
The good news is Australia's central bank chief is seeming to hint that there won't be another rate hike any time soon, according to Reuters, but it still means that a mortgage loan will be higher today than it was a month ago. So what can you do to find an affordable mortgage when bank interest rates have climbed? Here are five ways you can get the best possible bank interest rates for your mortgage.
The most proactive thing you can do is to do your homework. In addition to researching the Big Four, look around at other lenders as well. Banks can only make money if you borrow money, so they are in the position of having to work with you and not against you. Don't settle for the first deal you find. In fact, one of the strongest weapons you have is to research dozens of home loan packages and compare all the aspects of the loans. There will be a loan that fits your criteria and needs- you just need to search it out. Having a one-stop website that lets you compare hundreds of bank loans is an invaluable asset when bank interest rates are changing. Check frequently for the most recent information available.
Pay off any outstanding debts to make sure your credit rating is as high as possible. This may take a little time, but time is passing no matter what you are doing, so if you want the best mortgage rate you can get, you need to get started today. Look carefully at your credit report- there may be errors or inconsistencies that you can eliminate to improve your scores.
The higher your deposit, the lower your mortgage payment- and the greater your chances of approval. If you don't have the savings on your own, you may be able to look to your parents or other family members to help you. There are programs available that let you benefit from another person's savings account without the money ever having to leave their control, so even if an outright loan is not possible, it doesn't mean there is no hope. Many times future inheritance money can also be used to help increase a deposit for a home, so if your family is in a position to help you, don't be afraid to ask.
Remember that when you work with an agent, it is his job to get the best possible price for the seller, not the buyer. Keep your lips zipped as to your top-end figures. If the agent knows your top market figure, you can bet he will find you homes that are only in that range. After all, his commission comes from how much he gets for the seller. Do your research and know exactly how much you can afford to spend, but don't offer that information too readily. What they don't know, may help you.
While its understandable that once you've made the decision to buy a home you want to get on with it, this is too big a deal to rush. Take the time to thoroughly research the market and watch the trends. That perfect house may just come on the market next week- so don't be in too big a rush. Chances are you will be living with your decision for a very long time- so waiting a few weeks for the perfect home and the best loan package is well worth the wait.
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