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Variable interest rates are now anything but standard. Not only do the rates vary between lenders, but they can also vary within a lender, depending on the specific features you would like as part of your home loan.

Follow these tips to ensure you don’t get caught out paying more interest than you need to.

Select your repayment type wisely

To encourage borrowers to make principal and interest repayments (and actively reduce their debt over time), many lenders now charge a higher interest rate for interest-only repayments.

Unless you are paying interest-only on your owner-occupied loan as part of a broader strategy, you are likely to save by switching to principal and interest repayments. You can save money with a reduced interest rate and you’re also likely to pay your loan off faster.

Make sure you have the right loan

In response to regulators enforcing a 10 per cent yearly growth limit on a lender’s investment loan book, lenders have increased the rate on investment loans.

If you’re thinking of purchasing a property to rent out initially, don’t forget to switch the loan to owner-occupied once you move in. Otherwise you will pay a higher rate of interest than you need to and no one wants to do that voluntarily.

Contribute as much as you can to the purchase price

We’ve noticed lenders have become more conservative with their interest discounts recently and tend to offer greater discounts to borrowers with a strong equity position or largercash deposits.

If you can manage to borrow no more than 80 per cent of the purchase price (i.e. save a larger deposit or get assistance from family via a security guarantee), you might just secure yourself a bigger pricing discount and therefore pay a lower rate of interest.

But that’s not all …

While there are other factors affecting your interest rate, your selection of mortgage professional also has a lot to do with it.

An experienced mortgage professional team has strong relationships with the lenders they work with. As a result, you can benefit from increased rate discounts, faster processing times and superior loan structures.

An experienced team will not only establish your loan to minimise costs but, as your circumstances change over time, they will monitor your loan to ensure you don’t ever pay more than you need to.

An experienced team will continue share knowledge and expertise so you’re always finding out new ways to better manage your mortgage.

MO’R Mortgage Options is a Canberra based team of award winning mortgage professionals.

For 17 years, the family team has assisted countless Canberrans save time and money on their home loans.

Call us on 02 6286 6501 and we can do the same or you.

Download our free checklist, 31 Ways to Save Money on your Home Loan, here: mmo.com.au/save-money

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