There has never been a better time to know the interest rate on your home loan

The decision by the Reserve Bank of Australia to cut the cash rate to a record low 1.75% means that there is no better time for borrowers to know the interest rate on any of their loans.

The rate cut was delivered on the same day as Treasurer Scott Morrison delivered his first budget.

All eyes were on the treasurer because, at budget time, people want to know two things; how is the government spending our money and what’s in it for me?

The “what is in for me’ is a natural question as we look to digest information and then seek to establish how the information delivers benefits to us as individuals and our families.

We want to know about tax cuts, small business benefits, job opportunities through infrastructure spending, health care, education, superannuation entitlements and anything else that will help put money in our pockets, save money or create opportunities.

When delivering a budget and financial forecast I can only assume the representatives of the people will take into the consideration the amount of money they are making versus how much they are spending, the state of the economy, how many people are out of work and how they can create more job opportunities to help people put food on the table for their families.

They, I assume, would also be considering how much debt the country is in and what the repayments are on the outstanding debt.

The questions we expect our government to answer are exactly the same as we should expect of ourselves.

For example, let’s first just focus on the household debt and ask:

• Do you know the interest rate on your home loan and is it a competitive rate?
• Do you know the interest rate on your credit cards?
• Do you know the interest rate on personal loans and car loans?
• When was the last time you had a good look at your utility bills and establish if your supplier’s rates were as competitive as their competitors?

If we are waiting for the federal government to put an extra couple of hundred dollars back into our pockets we may well be savings thousands by taking control of our own budget.

The RBA decision to cut rates by 0.25% will put an extra $3.5B back into borrowers pockets if all banks and lenders follow the lead of NAB, CBA and Westpac by passing on the full 0.25% to their customers.

On a $400,000 home loan the 0.25% reduction equates to a saving of $1000.00 per year.

By knowing the rate on your home loan you can start to research the market through online platforms such as www.mozo.com.au and www.ratecity.com.au, to see how your rate compares to other lenders.

If you feel it is not competitive, you can call your existing lender and respectfully challenge them to review your rate in the hope they would like to maintain your business.

By making the call, one of two things could happen; your existing lender plays ball and lowers your rate to keep your business or you continue to search the market for a better home loan rate.

A rate reduction of, say, 0.20% would save you an additional $800.00 annually on a $400,000 home loan.

If you replicated the same process for your credit cards, any other loan and your utility suppliers then you may even be able to save more money.

The benefit of having your own budget night is that you can control the outcome.