One painless phone call could leave you hundreds of dollars richer this year and tens of thousands better off down the track.
Money is cheap right now, so renegotiating the interest rate on our home loan had been on my to-do list for some time, but I kept telling myself that I would get to it tomorrow.
Once I finally picked up the phone, it took just 15 minutes to save our family $100 a month, or more than $24,500 over the remainder of our loan if we keep our fortnightly repayments the same.
We will also pay off our home more than a year earlier, so I definitely regret not having made the call sooner.
About 10 years into our 30-year home loan with ING Australia, we were paying 3.13 per cent interest on our mortgage, which was above the bank’s advertised variable 2.89 per cent comparison rate on the same product.
Even worse, it was well over 1 per cent higher than the lowest advertised variable rate I could find by simply Googling ‘Australia’s lowest variable home loan interest rates,’ with Athena’s 1.99 per cent rate the best rate I could find.
(I later found Reduce Home Loans offered a rate of 1.79 per cent for people with a loan-to-value ratio no higher than 60 per cent – and you could probably find more suitable deals on sites like Finder and RateCity.com.au.)
Before calling ING, I made sure I had a few examples of better deals at my fingertips.
Leigh, the ING staff member who talked to me, was pleasant and didn’t pressure me into anything.
What prompted me to ask for a review of the interest rate, she asked.
The other much lower rates on the market, I said, plus a discussion with someone at Westpac when I went into a branch for another matter.
She asked whether I’d consider fixing any of my loan and I said at this point I just wanted the best possible rate on our variable loan, but I’d give fixing a portion of our loan some thought.
We could fix our loan at 1.99 per cent for four years.
Fixed-rate loans make budgeting easier because you know exactly what the repayments will be, but you don’t benefit if interest rates fall. It may also cost more to swap loans later if you’re charged a break fee.
Leigh said she couldn’t match Athena’s 1.99 per cent variable rate, but she could lower it by almost half a percentage point to 2.64 per cent.
Perfect, I said, thinking I should try and negotiate more but had to hang up to pick up my daughter from school.
That was that, and I have to say a much shorter and less painful phone call than I expected.
The experience has me thinking what other large expenses, like health or home insurance, I can renegotiate next to keep a little more cash in our pockets.
And it seems like I got in just in time: Four-year fixed rates are already on the move.