Is now the time to look for a better home loan deal?

Hopes for a cut in interest rates last week turned to dismay for borrowers as banks raise their variable lending rates outside the Reserve Bank's regular monthly cycle.

Are you a home loan customer to one of the big four banks? See below the interest rate rises the banks have made:

Westpac – 7.46% up 10*

Commonwealth – 7.41% up 10*

ANZ- 7.36% up 6*

NAB – 7.31% up 9*

Bendigo and Adelaide Bank also increased its standard variable mortgage rate 15 basis points to 7.45 per cent.

If you are on the lookout for a new home loan provider, consider all options.

With the amount of constant competition in today’s home lending market, it is common to have tempted with the thought of switching home loan providers.

Home loans are available from several types of lenders- thrift institutions, commercial banks, mortgage companies, and credit unions. Different lenders will quote you different prices, so you should contact several lenders to make sure you’re getting the best price.

If you change loans you could potentially save thousands of dollars in interest or take advantage of features offered by another loan. Do your sums and work out if the benefits of switching are worth the costs. Make sure you obtain all important cost information.

Ask your lender for a key facts sheet - From 1 January 2012 credit providers will need to give you a key facts sheet on home loans, if you ask for one. Key facts sheets will give you the information you need in a set format so it is easier for you to shop around and compare loans. They will also highlight important information such as the total amount to be paid back over the life of the loan.

Ask your current lender to do better - Tell your current credit provider you are planning to switch to a cheaper loan offered by another lender. They may suggest an alternative loan at a cheaper rate, or offer to reduce the interest rate on your current loan to keep your business. 

You can also get a home loan through a mortgage broker. Brokers arrange transactions rather than lending money directly; in other words, they find a lender for you. A broker’s access to several lenders can mean a wider selection of loan products and terms from which you can choose. Brokers will generally contact several lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act as your agent. Consequently, you should consider contacting more than one broker, just as you should with banks.

*Basis Points