Do your homework on your mortgage to ensure you're paying on the best home loan, said Joust founder Mark Bevan
Yesterday's decision by the Reserve Bank of Australia to reduce the official cash rate by another 25 basis points to 0.5 per cent, has the banks scrambling to make sure they pass on the benefit to their customers.
However, Mark Bevan, founder of Joust, said before mortgage holders celebrated their reduced payments, there were a number of components they needed to be aware of.
"Firstly, know your interest rate," said Mr Bevan.
At a Glance:
" If you already have a mortgage, make sure you know what your current interest rate is.
Many Australian's don't know what interest rate they are paying on their home loan.
"With the rate cuts last year and now another one - we believe people need to check what they are being charged and use free services like joust.com.au to see how much better they could do."
Mr Bevan said customers needed to ensure their banks do pass on the rate cuts.
"If your bank doesn't pass on the interest rate cut, you could be paying more than you should be," said Mr Bevan.
"You also need to watch the 'cash back trap'.
"At Joust, we pose the question; Why wouldn't the Bank simply offer you a lower rate instead of these huge cash back inducements?
"We think the answer is painfully clear as they want to get your business in the door and then hope (with good reason) that over the term of the loan they can claw back the cash amount in higher interest and they can safely rely on customer inertia, a lack of transparency and get away with what the RBA are calling 'loyalty tax'."
Another issue Mr Bevan has is with the so-called 'loyalty tax' where customers with home loans that are more than four years old are likely to be paying 0.40% more on their home loans than new customers.
"There has never been a better time to compare and check how your current interest rate compares to other financial institutions," said Mr Bevan.
On a final note Mr Bevan said to make sure you are checking the comparison rates versus advertised rates when shopping around for a new home loan or refinancing.
This is a sponsored article.
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