Why you should take time to compare interest rates

Managing the household finances can be a juggling act from one day to the next. With the cost of living on the rise and wages not keeping up with inflation, it is becoming increasingly harder to keep your head above water.

So, what can you do to make the household finances stretch that little bit further without foregoing the necessities?

Unfortunately, we can’t give you a pay rise and we still haven’t located the illusive money tree (yes, we are looking!) but we can let you in on a little secret that some savvy Mum Chief Financial Officers (or as we like to call them, Mum CFO’s) are already doing to help their pay packet stretch that little bit further. And the best part is, you can do it too right from the comfort of your own home.

We all have the necessary expenses that will never go away – mortgage, insurances, loans – but there are ways that you can reduce your risk and outgoings by simply doing a little bit of research. Most people practice the ‘set and forget method’. They set up their home loan and insurances and continue on with life without realising that years have passed without them checking to see if that great rate they got in 2010 is still a great deal in 2016.

You may have been hearing how interest rates have been consistently dropping over the past couple of years due to a slowing economy. Well, did you know that you can use this to your advantage! There has never been a better time to do some checking on the interest rates you can get on your home loan. Just because you have been with the one financial institution for years, doesn’t mean you are locked in with them. Even if you have a fixed term rate, you may still be better off financially breaking that loan for a new deal. You may find the costs of breaking the loan will come in less than the savings you will make on the interest rate itself. It will cost you nothing to make a few enquiries, and you never know, you could save yourself thousands.

Our Mum CFO’s have done just that and are saving hundreds of dollars a month just by refinancing. We found that several of our Mums were on interest rates of high 4’s. One was on 4.9%! When you can now get rates comfortably around the 3.9%, that is a whole extra percent in interest that doesn’t need to be paid. On an average $300,000 home loan, simply refinancing your interest rate from 4.9% to 3.9% would save you around $169 a month!

It is amazing how something that we pay every month we tend to let slide and forget that we can have control of how much we pay. We are onto our private health insurance deals every 1 April when the prices increase thanks to little reminders plastered across the TV like Political campaigns. But you can guarantee your lender will not call you up to tell you about their great new lower interest rates. So, every 1 April when you do the ring around for your next Private Health insurance deal, make it your opportunity to search the home loan rates on offer. You never know, you could just save yourself a little bit of extra cash along the way like our Mums did.

Written by Natasha Stewart of Mum CFO’s www.mumcfos.com. Natasha is a Mum, the CFO of her household and the owner of Mum CFO’s – a group dedicated to helping Mums with the day to day grind of managing the household finances and everything in between.

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