The Reserve Bank of Australia (RBA) chose to move the cash rate to 4.10% last week. With the cash rate increasing by 4 percentage points since the start of 2022, many households have felt the pinch of rising interest rates.
 
On top of that, many fixed-rate loans are due to expire in the second half of this year, which could double (or more) the amount of interest those households pay in interest.
 
Some reasons you may be able to get a better interest rate include:
  1. 1. You’ve been meeting or exceeding your repayments. Not only does this show the lender you are a reliable borrower, but if you are paying principal and interest, it will also bring your LVR down (the ratio of how much of your home you own vs the loan). A lower LVR could get you a more competitive rate.
  2. You’ve paid off other credit. If you previously had a credit card, other loans or a HELP debt that you have since paid down or got rid of, the lender could view you as less risky.
  3. You’ve cleaned your credit file. Improving your credit report could build a stronger case for a better interest rate. You could do this by meeting repayments on time, closing any old transaction accounts that could be charging fees, reporting any errors in your credit file or time passing since any damaging credit problems.
  4. You’ve had a pay rise or gained full-time employment. If your employment has changed to be more permanent or you have received a pay rise, you could look more favourable to a lender.
  5. You find a lower interest rate with another lender. This could provide better footing to negotiate with your current lender, or you could consider refinancing to the other lender. Keep in mind there could be costs involved in refinancing, so it is a good idea to ask your broker to run the numbers for you to determine if this is in your best interest.
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