I currently have a variable rate of 2.79% with CBA. I can change to a fixed rate of 2.44% for 1, 2 or 3 years. Should I switch to fixed?
More info
- only 1 month into my loan
- can pay off up to $10k on a fixed loan without fees
- not planning on paying much extra cash into the loan at this point in time anyway
It's owner occupied. I want to stay with CBA until I've paid off the guarantor part of the loan. My parents are guarantor and they are with CBA.
2.79 and 2.44 not much different I think. If covid getting worse banks might lower a bit more.
But yeah 2.44 is too high..
What will the difference actually cost you or save you in dollars at the end of the years, between the 2.79 and 2.44.
What's to negotiate? I'm with a big 4 bank and have all my banking with them. I have 2.24% on a fixed rate and I pay no fees for credit card, transactional or offset/home loan (No, I don't get offset on the fixed portion of my loan). All you have to be willing to do is leave. I've come very close twice but they have always caved.
Edit: My loan is substantially under 1mil too.
Thanks. Not sure of my ability to leave because of the structure of my loan. I've basically borrowed 100% of the loan and have my parents as a guarantor.
Is it broken?
Based on others comments, yes, yes it is
Or half fixed.
I'd wait for some sort of cashback deal then switch personally (it's what I did with the ANZ $4k bonus earlier this year).
Otherwise for me the hassle of changing loans as well as potential risk of locking in a certain rate outweigh the effort required. A lower rate + $2,000+ seems like a no-brainer, hard to not come up ahead, with the plan of re-evaluating switching loans once that period is done.
how realistic are those figures? (with what you pay and what you get back in long term)
Here is my concern. Every-time you change borrower (bank), you pay certain amount of fees for them. In addition, when you refinance you basically renew your loan term and with each loan you pay the max amount of interest in first months or years. So the amount you get with a cash back reward, is it all worth it?
You'll have to do the math, but you try to come out on top after taking into account fees and cashback. Usually these deals are good for fixed term loans, so people start to look for another lender in 2-3 years time. You can choose a shorter loan term when you refinance keeping the same leftover term period with your existing lender.
Hey op, I went through similar thing with my loan. Currently with St george on a 2.79% variable rate using a broker.
Decided to fix the majority on 2.24% with them for one year for two reasons:
-couldnt see RBA dropping cash rate further in next 12 months (especially by 55bps) (or even less chance banks passing on rate cuts)
-partner has had wage cut by 90% and not entitled to any job keeper benefits so not chance of refinancing elsewhere right now
So from the above decided to lock in and maybe in 12 months partners job hours improved and I have opportunity to refinance with variable rate with different lender.
If you got a big enough loan get CBA package for $395 a year and you get fixed rates at 2.29%
I fixed mine recently with tic tic for 2.22%, I could probably get a slightly better deal but it wouldn't affect me much as I'm only paying about $200 a month in interest and it will get less the more I put in my offset.
Assuming you are not thinking to switch bank and can’t decide how long to fix then fix it for 2 years (somewhere in between) lol
And realistically I think it’s hard to change bank in your situation
Investment property? If owner occupied, then 2.44 fixed is way too high, I heard people getting 2.19 or 2.09
That's why never go with big 4 banks unless you have millions dollars worth of loans (therefore you can negotiate hard)