While you want to make sure your home loan gets approved, don’t hesitate to research how to get a lower interest rate, too.
Interest rates are determined by multiple factors, such as: the lender you are considering, your income, your deposit and more. You can certainly do some things on your end to improve the rate you receive.
Let us guide you through 6 quick tips tailored by our Experts that may help you get a lower interest rate.
How To Lower The Interest Rate On Your Mortgage
Improve Your Credit Score
Starting from your payment history and account balances, your lender will take a good look at your credit situation when analysing your application.
If you aim to secure the lowest interest rate possible, it’s time you start improving your credit. In case you are applying for a joint loan with a spouse or other partner, pay attention to their credit as well.
Although credit bureaus like Equifax don’t disclose their credit score calculation process, here’s a brief estimation of the formula they use:
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- Payment History – 35%
- Credit Utilisation – 30%
- Length of Credit History – 15%
- New Credit Accounts – 10%
- Credit Mix – 10%
Our experts specialise in helping homebuyers like you maintain their credit scores, regardless of their credit situation. Talk to one of our experts today, or give us a call on 1300 889 743.
Maintain Stable Employment History
A consistent, long work history speaks volumes to mortgage lenders. Gradually growing, stable annual earnings on your loan application means your income is reliable and won’t be a risk for your lender. You’ll receive one of the lower interest rates available.
On the other hand, if your recent financial behaviour shows multiple job changes, it gives an impression that you don’t fall into the ‘safe borrower’ category. The interest rate you receive will be more expensive than one that goes to a lower-risk borrower.
Put Down A Higher Deposit
Calculate and analyse what amount of money you are willing to put down on your house. The higher your down payment, the less your borrowing amount will be and the less interest you’ll have to pay.
Putting a substantial amount of money down lowers the amount you borrow and helps earn the lender’s trust. A deposit of 15% and less is considered as a low deposit – a deposit of 20% is enough to impress. This can save you thousands over the life of your loan.
Expert Tip: Lenders can charge high interest rates for very small home loans as well. Try to keep your loan amount above $100,000 to make sure you bag the best mortgage interest rates possible.
Find The Best Deal
No better way to find the best interest on your mortgage than by seeking out the lender with the lowest rates. Shopping around gives you the answer to your unique home loan situation. Browse through 50+ lenders in our panel to find the best loan for you.
While banks are a good option for some homebuyers, non-bank lenders might be the way to go for others. Depending on factors like your borrowing amount, strength of your loan application and term of the loan, ideal lenders differ. Shop around to find the best deal for your home loan requirements.
Read more about negotiating your interest rate with your lender.
Go For A Shorter-Term Loan
A shorter home loan term means you make higher repayments, but you pay less in interest. As short-term loans are usually considered less risky, your lender will most likely settle for a lower interest rate.
Apart from that, lenders are always in favour of homebuyers repaying loans quickly. So if a lower interest rate is among your top priorities, go for a 10-year or a 15-year mortgage, instead of a 30-year mortgage.
Get Expert Assistance
Get professionals to help assess your financial situation and your loan application. Our Experts know the best possible ways to help you land the lowest interest rate possible.
From negotiating a great interest rate on your behalf to assisting you throughout the life of your mortgage, we make your home loan experience convenient.
Call us on 1300 889 743 or fill in our free assessment form and we’ll let you know the best interest rates available to you.
