HOW TO GET THE MOST OUT OF YOUR HOME LOAN With the cash rate on hold at two-and-a-half percent, households will continue to enjoy cheaper repayments, but the expert advice is to avoid complacency and consider refi nancing or even shifting lenders to get the most out of your mortgage. FINANCE Story Jason Oxenbridge Profi ts at Australia’s largest banks have swelled to a record $27.4 billion this year. According to a recent report, employee numbers at the big four total 170,200. While skyrocket profi t growth is one thing our largest fi nancial institutions have in common, each is unique in the way it carves up the mortgage market. What most concerns credit advisers like Peter Cooper is not so much the difference between banks when it comes to servicing your home loan, but the fact that most people are unaware of how best to make the banks work for them. There are signifi cant savings to be found – simply by asking the question – ‘am I getting the best result from my existing lender’? “What’s most worrying is that people think they have to be loyal to their bank because they feel obliged in some way and this is potentially trapping people to debt levels that really should be negotiated,” says Cooper, an adviser with more than 30 years banking experience. “The difference between getting your dream house sooner or paying off the one you have a lot faster can be as simple as going to the bank next door. People are not always aware that banks have different policies.” Assessment Rate All fi nancial institutions have an obligation to consider interest rate fl uctuations. That is why they use (refer to) servicing rates or plug rates in their considerations. This is usually two percent above the rate you are attempting to borrow to purchase or refi nance the property. However this varies by lending institution and also by each product within the same institution. Living Expenses Each bank uses a different fi gure for living expenses and can vary by as much as $200 per month which impacts on borrowing capacity. It depends entirely on the individual banks and what their view of the world is. How much you can borrow depends on which lender and which product you select – a big difference when chasing your dream of home ownership. pindaramagazine.com.au Pindara Magazine 109
Pindara Private Hospital Magazine - Issue One
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