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Save up to $2,772 a year by switching home loans | Dollar Saver tip #66

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Save: Up to $2,772 a year

Tip overview

By reducing your interest rate you could save $231 a month. But there's a way to save even more than that in the long term.

With economists predicting that interest rates are likely to go down later this year, you want to make sure you're on the front foot for the best savings.

Take a look at the interest rate you're paying on your home loan at the moment. The lowest interest rate available on this month is 5.8%: how much more than that are you paying?

Did you know?

According to the latest figures from the Reserve Bank of Australia (RBA), the average interest rate being paid for owner occupier variable loans is 6.39%.

Assuming the average loan size in Australia at the moment of $608,448, you could save $231 a month on your home loan repayments if you switched from a rate of 6.39% to 5.8%.

That's $2,772 a year, and $83,451 over the life of your loan.

And while that's the near-term saving I'm here to tell you about, you don't have to stop there if you want to save even more.

Let's say you reduce your interest rate, but continue to repay the same amount that you were already paying each month. Effectively, you're making extra repayments.

With today's interest rates, you could reduce your home loan by more than 4 years. That would save you $113,918 in interest over the life of the loan.

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