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How To Ensure You’re Still Getting A Good Home Loan Rate

As rates rise and fall, it’s important to ask yourself “Do I still have a good home loan rate?”

There are a number of things to check when you want to know whether your home loan is up to scratch, so we here at CANSTAR have put together a guide to help simplify this process for you.

Before applying, and during the home loan application process, it is important to do your research. Fortunately, CANSTAR can help you compare home loans, as we regularly research and give star ratings to home loans throughout the year. We try to capture as many home loans available on the market in Australia as possible, and with more than 1,100 options on our database at present, you have a wide range of options to choose from:

Compare Home Loans with CANSTAR

Is the interest rate good enough?

The first step in re-evaluating your finances and ensuring a good home loan deal is comparing current interest rates on the market and seeing where your loan’s rate stacks up. Here are the current interest rates on our database at the time of writing:

Residential Home Loan Market
Average Minimum Maximum
Standard Variable Rate 4.45% 3.35% 5.73%
1 Year Fixed Rate 4.2% 3.39% 5.04%
3 Year Fixed Rate 4.17% 3.59% 5.05%
5 Year Fixed Rate 4.62% 4.04% 5.21%
Source: CANSTAR. Loans are based on a loan amount of $300,000 and are current as of 17 January 2017.

 

Investment Home Loan Market
Average Minimum Maximum
Standard Variable Rate 4.71% 3.69% 6.08%
1 Year Fixed Rate 4.41% 3.69% 5.17%
3 Year Fixed Rate 4.35% 3.69% 5.24%
5 Year Fixed Rate 4.91% 4.24% 5.61%
Source: CANSTAR. Loans are based on a loan amount of $300,000 and are current as of 17 January 2017.

Are the features working for you?

While rate and repayment amount are important, by comparing the features of your current home loan with others on the market, you can make the decision to change, or stay with your current lender. A few home loan features to look for include:

For more information about some of the home loan features available, click here.

What fees are you paying?

Another important step in re-evaluating your finances is comparing the different fees that a lender might charge. Sometimes hidden fees can add hundreds of dollars onto your bill, so it’s important to keep them under control.

Some common loan fees and the average charged for these fees are as follows:

Avg Fee Charged on Standard Variable Loan
Fee Type Owner Occupier Property Investor
Early Exit Fee Varies Varies
Discharge Fee (Termination Fee or Settlement Fee) $259.50 $254.17
Ongoing Fees (annual fees or monthly fees) $96/year $104/year
Redraw Fee Varies Varies
Source: CANSTAR. Based on loan amount of $350,000 and LVR of 80%.

If you’re considering switching home loans, find out whether the new loan would charge you the following fees (which you would have already paid for your first loan):

Avh Fee Charged on Standard Variable Loan
Fee Type Owner Occupier Property Investor
Establishment or Application Fee $449 $473
Property Valuation Fee At cost ($200-$600) At cost ($200-$600)
Lender’s Mortgage Insurance (LMI)* $6,912* $6,912*
Source: CANSTAR. Based on loan amount of $350,000 and LVR of 80%.
*Based on loan amount of $400,000 and LVR of 90%.

For more average fees charged on home loans, click here.

Our easy-to-use Home Loan Comparison Calculator incorporates ongoing and upfront home loan fees in making comparisons between two loans. Try it out and see how much you could save by choosing one loan over another.

Check out CANSTAR's Home Loan Comparison Calculator

How often should you check your home loan?

Just because another lender’s features or rates might convince you to change, doesn’t always mean you should. Ask yourself, “Am I getting a good home loan deal?” and if the answer is no, and a different lender is offering both lower rates and lower fees, then refinancing may work in your favour.

Just be warned – refinancing is not a free switch. If you’re refinancing your house over and over in order to get a great rate, the cost can slowly add up.

A good rule of thumb would be to check whether your home loan is up to scratch at least once per year, when our main star ratings for home loans are released. By using the simple points above to check if you still have a good home loan, you can keep your finances on track and work towards financial security. Compare over 1,100 home loans with CANSTAR:

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