Our first post for 2015 is from the lovely Larissa from Hey Little Spender. Today she is sharing with us how she saved $93 per month in 15 minutes! Take it away Larissa!!
I know I should love this stuff, being a savings blogger and all that, but I’ve been procrastinating big-time on sorting out my two home loans.
They are the biggest investments I’ve ever made, and I worked and saved bloody hard to buy them.
What am I paying this much for?!
I know the rates are way too high at the moment, after coming off the end of a special rate which finished some time back. However beyond paying a quick visit to a mortgage broker, I’ve done nothing to fix the situation.
It’s all a little confusing – mostly because I am thinking about selling one of the places early next year and buying a new one closer to the city. And I didn’t know whether I could do anything to reduce the rates in the meantime while I went through the whole selling process, which is likely to take a while.
Plus I’ve never sold a house before, so the thought of doing that also terrifies me a little!
However today I took the bull by the horns, and decided that it was really time to stop wasting my money and get this thing sorted out – especially because I’ll need every penny if I plan to buy a new place.
I decided to take a little inspiration from my mate Jeremy, who often calls his bank to wrangle the best rate on his mortgage – read his tips here.
I thought I’d better go in with at least a little bit of firepower, so I did a quick search on comparison website Canstar, and found the cheapest rate going. I didn’t look into the specifics too much (OK, at all) I admit, but thought I’d better have at least a ballpark interest rate up my sleeve to present to the bank.
Make me an offer, or I’m gonna leave
So with the lowest interest rate I could find written down, I gave the bank’s mortgage people a buzz to see what they could do, noting that unfortunately I would have to leave unless I got a discount.
They said they’d get back to me in 5-10 working days (arrghhh), but in the end it only took a few hours for a return phone call.
What they offered
My interest rates were at 5.44% – way too high for Australia I know.
One option was to take out a two-year fixed interest loan on the investment property I’ll be keeping (which would have been a 4.79% interest rate plus an $8 monthly fee). However it seemed a bit premature to agree to that on the spot.
Also, to complicate things further, because I bought the investment property using equity from the place I’m planning to sell, I’ll have to stick some of the sale proceeds on the investment property to keep the bank happy.
That will mean the loan amount is likely to change. Still with me?
The other, more temporary option was to just change both properties to a 5.2% variable, no fee interest rate for now while I sorted out everything else to do with selling.
What I saved
To my surprise, I was able to change to the 5.2% over the phone – without even signing a form – and my online bank account confirmed that this had been done immediately.
On one property that means a monthly saving of $63, and for the smaller loan it’s a $30 saving.
I know I’m going to have to shop around again for a better rate once I buy a new place – if I decide to go ahead with that option – but from January, that’s $93 extra in my bank account each month. And it only took 15 minutes.
That saving will come in super handy as I squirrel away my pennies to buy a new place.
So there you go. I could kick myself that I didn’t do it earlier!
What have you done to find a lower interest rate? Share your tips here.
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The information contained in this post is general in nature and does not constitute financial advice. Please see your financial advisor for advice specific to your individual circumstances.