Yet again this month the RBA announced no change in interest rates and word on the street is there won’t be any changes soon either. You might be pretty miffed that your monthly budget has been set on ice with no immediate relief in sight for your cash flow, while your bank’s profits continue to climb. Have no fear Mozo has the answer – give yourself a pay rise.
Pick out a new home loan
Home loans take the biggest bite out of most of our budgets, so the trick is to keep those repayments as low as possible. “How do I do this?” you ask, simply find a better deal! Trust me it’s actually a lot of fun when you start seeing just how much money you could save.
LVR under 80%?
If you’ve been diligently paying down your home loan and you’ve now got more than 20% equity in your home, then it’s a great time to switch as some of the market’s best deals are available to you. Most providers offer rate discounts to borrowers with loan to value ratios of under 80%.
Say your current home loan is with one of the big four banks, maybe the Commonwealth Bank’s Standard Variable Rate with a rate of 6.80% and you’ve already paid off $100,000 on your $600,000 property. To pay off the remaining $500,000 balance you’d be looking at monthly repayments of $3817.00 for the next 20 years. If you make the switch to My Mortgage Freedom’s Low Rate + with a lower rate of 5.66%, your monthly repayments would be just $3,485. That’s a monthly difference of $400 or $79,661 over 20 years! I don’t need to help your imagination figure out what to do with $80,000 but maybe… install a pool, buy a luxury car or take a 1st class around the world holiday?
Here are 3 more low rate home loans for a LVR <80%, with the difference in monthly savings compared to the Commonwealth Bank’s loan.
Loans.com.au Dream Catcher 5.65% – $335 or a weekend getaway every month
ING Mortgage Simplifier Smart Pack 5.88% – $269 or free petrol
Bankwest Online Home Loan 5.77% – $301 or dinner at a Michelin Star Restaurant
LVR Over 80%
If your LVR is higher than 80% your best option is to look for a loan that offers a discount based on the loan amount. For a loan of $750,000 and a comparison of what you would save compared to a Commonwealth Bank Standard Variable Rate – These are our top picks:
Newcastle Permanent Premium Variable (Premium Plus Package) 5.92% save $431
AMP Variable Rate Loan (Professional Package) 6.02% save $383
Bankwest Premium Select 6.03% save $378
Ambush your savings account too!
Now that you’ve got the ball rolling, it’s time to make more money on your savings account too. The banks are fighting for your money right now so get savings savvy.
Not that we’re picking on anybody for recently announcing a record $7.1billion profit but if you had your money in a Commonwealth Bank NetBank Saver account you’d be getting an standard interest rate of 3.50%. On a $5000 saving over 5 years you’d earn $955 interest. But if you switched to the UBank USaver with a 5.10% interest standard rate, you’d come out with $1449 total interest or $494 more.
Here’s a few more higher interest accounts to help you compare with the savings difference.
Bankwest Telenet Saver 4.0% – $150 more interest earned.
Virgin Money Virgin Saver 4.5% – $304 more interest earned.
With around $80,000 in savings up for grabs this is your chance to pay yourself like a Big Bank CEO. Say it takes you 3 hours to switch home loans and 1 hour to set up a new savings account, you could earn $20,000 per hour – that’s a nice day’s pay!
MORE in this month’s Moneyzone:
Mozo has pretty much reinvented the wheel with this one. Check out our alternative to the budget – a spending plan that helps you afford almost everything you want and need!
We’ve analysed all the rewards card programs currently out there, we’ve trawled through all the data. Now’s the big reveal: which are the best rewards cards on offer?