Found a cheaper rate

Have you ever thought: “My lender is charging me a higher home-loan rate than I see advertised elsewhere. Can I change lenders?”

This is the main reason most people change lenders and a broker can help you work out the potential savings.

When shopping around, a good start is look at the ‘comparison rate’ of each product. A comparison rate is essentially the ‘true’ rate, taking into account all fees and charges you will pay on the loan. There are limitations with a comparison rate, but it generally is a more accurate picture of a loan’s cost that the advertised interest rate alone.

The honeymoon’s over

“I have just come off a ‘honeymoon’ interest rate to a much higher rate. Can I move lenders or am I locked into my mortgage?”

In the past this may have been an issue as early repayment fees may have applied, but it is no longer legal to charge these.

Future rate rise worries

“If I move my mortgage to a new lender, is there anything stopping that lender from increasing their rates in a few months?”

It depends on the kind of product you have. If you’re concerned about rising rates, perhaps you should consider a fixed-rate home loan, with fixed repayments for a period of 1 to 5 years. In my own experience however, people are usually better off in the long run sticking with variable rates. On a variable rate loan any lender can raise the rate at their discretion, it is extremely rare though, and you can just refinance out so it’s not something lenders do if they want to keep their customers.

Why aren’t they all equal?

“Why do some lenders charge more than others when lending the same amount of money?”

Banks and other lenders pay different amounts for the money they lend to you; they have different overhead structures and different profit expectations.

All these factors affect how much they charge to lend people money.