When the going gets tough, the tough go shopping. That’s what I did this week when my bank informed me that interest rates were going up.
The Reserve Bank of Australia may have kept the official cash rate on hold at 1.5 per cent when its board members met on Tuesday, but the banks are clearly moving rates higher.
This week, the bank I have been with since I was 15 told me that it needed to reclassify my home loan to investor status, away from owner occupier.
What bugged me is that the new variable investor loan interest rate would be just over 5 per cent.
A quick math check meant that this would cost me about $4,500 extra a year in repayments.
The reclassification is what happens when you hold property that is earning an income, such as rent.
This change is happening as the prudential regulator tries to pressure banks to ease back on the amounts they are lending to investors.
It is also irrespective of tax law that allows you to maintain a property as the main of residence for up to six years if it is income producing.
So, after much aggravation at what I regard as a money grab, I decided to get some help from a broker and found a better rate of 3.88 per cent for an investor loan, with another one of the major banks.
The switch will cost me $500.
Now, you don’t have to use a broker, you can shop around on websites like RateCity or Finder.com.au for deals.
But frankly, and if you look at my video in our Women’s Money Report, I’m clearly time poor and will take the help!
