Some Australians maybe paying double the interest rate on their home loans

A survey conducted on home loan rates being paid by self-employed people reveals that on average, they pay between 5.5% to 6% per annum, and sometimes even 8%, adding thousands of dollars of debt on the life of the mortgage.

Source: Getty Images

The survey looked at mortgage repayments of 1,000 self employed people around Australia. It was conducted by online mortgage marketplace Hashching and its founders Mandeep Sodhi and Atul Narang told SBS Punjabi that "most self-employed people mistakenly believe that they can't get home loans below 4% interest rates, because of which they don't ever renegotiate their existing home loan rates."

"If your income is consistent, your repayments reach the bank regularly, and you have a good credit rating, then there is every reason for you to renegotiate your home loan rate with your bank and settle on a lower repayment rate", says Atul Narang.

"Most self-employed people feel that because their income may fluctuate and their financial records may not be as clear as of PAYG home buyers, they may have to live with higher interest rates, but that's not true".

Mandeep Sodhi says, "some years ago, even I renegotiated my existing home loan with my bank and saved 0.15% off my home loan rate. That was a substantial saving for me. Considering that people are paying upto 8% interest rates at the moment, if they can renegotiate to even 1% lower rate, then they will be saving $80,000 over the life of their home loan".

Mandeep Sodhi and Atul Narang, giving tips to SBS Punjabi listeners on home loan rates Source: Supplied

Speaking to SBS Punjabi, Atul Narang and Mandeep Sodhi gave many tips to our listeners, which could potentially save home buyers thousands of dollars. Some of the tips are:

1.Have a conversation with your bank about re-negotiating your existing home loan repayment, especially, if the Reserve Bank of Australia cuts interest rates.

2. Speak to your friends and check online about the current rates being negotiated by others - speak to your bank about it.

3. If your bank doesn't agree to reduce the rates, check if other banks will - there are no exit fees.

4. If you have a fixed term rate, you could pay a penalty for exiting early, but do your homework and calculate savings vs penalty.

5. Ensure that you make loan repayments on time. Also remember to pay credit cards, phone bills, electricity bills etc on time, since there is now a comprehensive reporting system used, and defualters may not be able to renegotiate favourably.

These are only some of the tips given to SBS Punjabi listeners by Mandeep Sodhi and Atul Narang - to hear all the tips, listen to the audio links above.