Avoiding the loyalty tax in 2022

As of the middle of this year, the average interest rate for new home loans was 3.51%. The average interest rate for established home loans was 3.99%.

This sums up what the loyalty tax is all about. Basically, lenders reserve their most competitive offers for new customers.

Taking out a new home loan

If you’re taking out a home loan, the loyalty tax works in your favour. It means you’ll have a better shot at securing a competitive offer – and an even better shot if you speak to us first.

It also means that your new home loan definitely isn’t something you want to set and forget. Instead, we suggest you:

  • Track what the RBA does with cash rates each month
  • Monitor whether your bank passes these changes on to you
  • Speak to us as soon as your circumstances change
  • Ask us about repricing or refinancing your loan

If you already have a home loan

Refinancing seems to be on everyone’s radar, and while there are certainly advantages to refinancing, it’s something you want to do with a trusted professional in your corner.

When deciding whether refinancing is in your best interests, we’ll help you determine:

  • Strategy: Does the loan you’re switching to support your overarching property strategy?
  • Fees: Will the exit fees, valuation costs, and application fees be outweighed by the gains you make from switching?
  • Protecting your credit score: Will this application negatively impact your credit history?

To reprice or refinance?

Did you know that getting a better deal on your existing home loan doesn’t always mean switching lenders?

Sometimes, it’s simply a matter of us negotiating a better offer with your existing bank – otherwise known as repricing.

Speak to us

There are so many variables to consider, and lots of moving parts, which is why we work with our clients for the life of their loans to make sure they don’t fall victim to the loyalty tax.

Get in touch to understand your options.

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