Beyond the Rate

When you’re thinking about a home loan, what’s the first thing that springs to mind? For most people, it's the interest rate.

We're bombarded with advertisements promising the lowest rates, and it's easy to get fixated on that one number. But what if we told you that focusing solely on the interest rate can be a big mistake for your long-term financial health?

As a strategic wealth partner, we've seen countless individuals and families get caught up in the pursuit of the absolute lowest rate, only to find themselves stressed and financially constrained down the track. In our experience, a mere 0.1% or 0.2% difference in interest rate might seem significant, but it often translates to a negligible impact on your monthly repayments. What truly matters is the overall structure of your loan and how it aligns with your life goals.

The Hidden Costs of a "Cheap" Loan

It’s natural to want to save money, and a low interest rate certainly sounds appealing. However, many people fall into a common trap: they sign up for fixed-rate loans at seemingly attractive rates without fully understanding the limitations. 

For instance, a lot of fixed loans don't offer an offset account facility. This can be a huge oversight. An offset account allows you to link your savings directly to your mortgage, reducing the interest you pay by offsetting your savings balance against your loan. If you don't have one, you're potentially missing out on significant savings over the life of your loan.

Another common issue we see is people paying hefty annual fees for loan packages that include features they simply don't use, like credit cards. In our experience, around 80% of people don't even use the credit card facility, yet they're still paying for it. 

Why pay for something that isn't benefiting you? 

There are now many lenders offering offset accounts for a much smaller monthly fee, perhaps $8-$10, without tying you into an expensive package. This seemingly small saving of hundreds a year can add up to thousands over a 30-year loan term.

Your Financial GPS

At True Capital, our approach has always been about proactive planning, not just securing a loan. We believe your loan should be a tool that supports your long-term ambitions, whether that’s building a property portfolio, becoming debt-free by retirement, or simply having peace of mind.

This means looking beyond the immediate interest rate and considering elements like flexibility. 

Can you make extra repayments without penalty? 

Can you easily access any redraw facility? 

Will the loan structure adapt if your financial circumstances change? 

These are the questions that truly define a good loan. We always tell our clients, Let's not complicate things. We simplify the process by asking for all necessary documents upfront, eliminating frustrating back-and-forth communication. This efficiency means less stress for you and a faster, smoother process.

Restructuring for Real Savings and Peace of Mind

One of the most impactful things you can do, and something many people shy away from, is to regularly review and potentially restructure your loan. People often fear the hassle of switching banks, but with the right broker, all that burden is taken off your shoulders.

We've seen clients save substantial amounts by simply optimising their loan structure. For example, consolidating high-interest unsecured debts, like personal loans or credit cards (which can carry interest rates of 15-18%) into your home loan at a much lower rate (around 6%) can significantly improve your cash flow.

We worked with a client who, by restructuring their loan and consolidating debts, saved $700 a month. That’s almost $10,000 a year back in their pocket—money that can be used for investments, savings, or simply enjoying life more.

Our firm provides a proactive financial health check for all clients after 18 months, and this ongoing support has saved our clients over $37,000 per annum. This isn’t just about getting you the loan; it’s about making sure your financial journey is set up for continuous success and growth.

So, instead of fixating on the headline interest rate, ask yourself: Is my loan structure truly serving my long-term financial goals?Give us a call to review your loan structure to see if you really are on the right deal.