Reducing a Home Loan Rate (from 5.25%) When Not Working Full-Time

Laoe111 on 04/06/2019 - 16:46
Last edited 04/06/2019 - 17:55

Hi OzBargain Community,

I was after some advice regarding my mother's home loan rate and how I can help her reduce it.

It is line on credit home loan (with RHG mortgages) from approximately 12 years ago which stands at 5.25% p.a, with approximately $130k left.
She took out the loan when she was working full-time but at the moment she is receiving com-care payments and her superannuation - earning approximately $37k a year. She has hesitated to ask other lenders for a better rate as she thought they would decline her due to her financial situation. She does have a good credit history from what she has told me, and she does pay off the loan monthly.

I have little financial knowledge but seeing other rates offered by lenders in 2019 I thought that 5.25% is quite high. As I am working full-time, I believe I would be able to co-sign a loan from another lender.

(1) Would it be a good idea to contact RHG directly and ask for a better rate?
(2) Or would it be a better idea to go through another lender and co-sign the loan with my current full-time employment and good credit history.

Any advice is appreciated.
Thank you.

Financial Home Loan Loan

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Comments

  • kipps on 04/06/2019 - 16:48
    +1

    Why can't she use superannuation to pay off the mortgage if she's already reached preservation age?

    • aoe111 on 04/06/2019 - 16:55

      From what she has said, when she started receiving com-care (at 53), she was not of age to take the entire amount from her superannuation. So she started receiving com-care and superannuation fortnightly. At this point, she is of age but she is unsure if she can take out the entire amount. She will look into this, thank you.

  • Ocker on 04/06/2019 - 16:56
    +1

    See a mortgage broker

    • aoe111 on 04/06/2019 - 17:06

      Can you recommend a good place to find one? I know I can google it, but how can I do it the Ozbargain way? Thanks

  • mortgagebroker on 04/06/2019 - 20:13
    +3

    The first step is to contact RHG directly and ask for a rate reduction.

    Consider getting some advice from a financial planner on paying down her home loan with her superannuation.
    Many people at retirement use their super to pay down their mortgage.

    If this is a line a credit loan, it might be an idea to pay it down to a few thousand then she will still be able to access the funds available in the line of credit.
    This can be good considering she may not be approved for this amount in the future.

    • Quantumcat on 05/06/2019 - 10:52
      +1

      Yes, don't pay down the full amount!! Great for being able to access emergency funds without any questions being asked. A friend of mine paid down his loan then later regretted it as taking a second mortgage out on his property he got a worse rate. He should have just paid it down to a few thousand left then as it got closer, withdrew again.

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