Shift in bank policy - Make sure you're not spending more than you have to
There has been some proposed restrictions in the media lately about tools to slow down the housing market. Most have been hypothetical ideas such as the income to debt ratio but one change has been put in place by a bank this week that we think will catch out a lot of unsuspecting borrowers.A major bank has changed their interest rate policy to exclude those purchasing rental properties from getting their special rates. We are yet to see whether others banks will follow suit but this change has come in response to Reserve Bank changes late last year requiring the banks to hold more capital on investment property loans.
What could this cost you?
If your bank charged you just the advertised interest rates rather than special rates (or even a further discount) the extra cost would look something like this.
$300K lending @ 4.75% fixed 2 years instead of 4.19% fixed 2 years is going to cost you an extra $32/wk or $1680 per year.
Over that two year fixed term that would give you enough savings to perhaps put in a heat pump or some new carpet in your rental property and allow you to increase rent or reap the capital gains.
We are often able to negotiate even better interest rates than the special rates offered by lenders and will continue to strive toward negotiating excellent interest rates for our clients. We think with this change it is more important than ever to get an understanding of what rates other banks will offer you to ensure you're not paying out more than you have to be.
We'll be contacting our existing clients as their fixed interest rates expire to ensure we negotiate the best rate but we'd suggest now would be a good time for a review if you're not already working with us.
You can email us directly using this link or click through to our Best Home Loan form and submit some details so that we can provide a personalised review of your home lending and advise where you could make improvements and savings.
As always we're committed to saving our clients money, making things easy and getting you debt free faster. If there is anything we can do to help just let us know.Adam Thompson and the My Mortgage Team