Reduce Your Interest Rate Down
One of the main purposes of this website is to help you maximize the profits you make from your property investing. And that means sharing with you the things you need to keep a close eye on as they relate to your properties. Things like – how you can reduce your interest rate today!
If you’ve been reading my blog for any length of time, you will know I’m always talking about how important it is to know your numbers. Knowing and understanding where you can continually extract more income from your portfolio is part of your learning journey.
Some people have the attitude that saving or earning an extra $10 or $20 dollars here or there is not important but I’m sure you’ve heard the saying before
“If you take care of the cents, the dollars will take care of themselves.”
Let me ask you a question…. If you found a $50 note lying on the pavement without an owner and picked it up – would you think it was your lucky day?
Loads of people spend a fortune week after week buying lotto tickets just waiting for a win. Imagine if you had a ticket and when you got it checked to see if you had won anything you heard the bells sounding off like they do when there is a winning ticket. The cashier tells you that you’ve just won $600!!! Wow – how cool would that be??
Well, you can get yourself a ‘lucky day’ feeling easier than you think….. all you have to do is make a phone call to your bank. Here’s why…
As savvy investors, we are constantly keeping a check on how to reduce the interest rates for our property loans and requesting they be reviewed.
A reduction in our variable rate from 4.95% to 4.85%.
For the level of loans we have with this bank, this equates to a saving for us of $600 per annum.
The reduction in the interest rate may not seem like a big thing but if the $600 was a lotto win I doubt there would be anyone that would snub their nose at being excited over that.
The ability to negotiate your interest rates and have them reviewed is a win for you as a savvy investor. It’s an example of how you must constantly ‘work’ your portfolio to gain maximum returns.
Having a portfolio of ‘buy and hold’ type properties doesn’t mean you can forget all about them once you’ve gone past settlement. Investing in real estate is a business all of its own and even if you work at another job, you must make time for your portfolio if you want to maximize your profits.
Three main areas that need regular attention are:
- Interest rates
- Rent review
In regards to your interest rates, if you have your loans at a variable rate then make a note in your diary to call each bank you have loans with and ask them to reduce your interest rate. Do this at least every twelve months, if not more often.
We make a call like this to our banks regularly. Every time, we get rewarded with a small interest rate drop regardless of where the market rate is.
Unfortunately you don’t have this luxury if you have decided to lock your interest rates into a fixed rate. If you need to check on whether you want to stay at variable rates or lock into fixed rates, it’s a good idea to chat this over with a reliable broker.
Why Is It Important To Reduce Your Interest Rate?
The interest you pay on your property loans is one of the biggest expenses you will incur as a property investor. So it stands to reason that whenever you can get a reduction in what you are paying, you are saving money.
Even if the amount you save is small or if you already have enough to pay for your properties, saving money is important.
Here’s a few reasons why:
1. Save for an Emergency Cushion
It’s always comforting to have an emergency fund set aside that will cover unexpected expenses for your property portfolio. This could be any number of things; a new oven, replacing or installing air-conditioning, an extended period of time without a tenant or even loss of your job.
2. Another Deposit for Your Next Property
Every bit of money you can put aside or save will get you to your next deposit even quicker. The quicker you can get into the property market again, the sooner your financial wealth can start to increase, the sooner you’ll be able to live a freedom lifestyle.
3. You Can Only Spend Your Money Once
Once it’s gone – it’s gone! I believe in abundance and know that money can be made over and over. But it’s a whole lot easier not to spend it unnecessarily in the first place. Regardless of whether funds for your properties are coming from the bank, a joint venture partner or your own funds, everything that is spent on your properties is less you have to spend on something else you would love to be doing. Spend wisely and save madly.
People who regularly save and invest are the ones who end up being wealthy.
It is important that you trim your spending and save where you can so that you can really begin moving forward and acquiring wealth.
Today’s action step: Make time in your diary to go and call your bank to request a review to reduce your interest rates.
UPDATE TWO WEEKS LATER:
We did it again!! Another $678 in our pockets.
Have you ever been into a store to buy something and asked the retailer if they could match the price you were quoted for an item you saw down the street? I bet you have. But have you ever thought of doing the same thing with your bank?
Last time I posted telling you how Murray and just negotiated a reduction in the interest rate we are paying on our loans with one bank. Then this week, he went to another bank we also have loans with and told them we had just got a reduction on interest to 4.85% with another bank, and he would like to request they matched it.
To tell you the truth, we really didn’t expect a positive response because our broker had already negotiated a reduction on rates with this same bank only three months ago. But it’s always worth a try.
Well, how pleased were we, when after a day or so thinking about it, the bank came back and said YES!!
Score!! – That means over the past two weeks, we have negotiated a saving of over $1200 per annum in interest payments. That’s money we get to keep in our pockets rather than the banks getting it.
Imagine what it would mean to you if you could save $1200 each year by doing so little. That’s extra money you could put towards further investments, paying school fees or taking a family holiday. Either way – it certainly goes a long way to helping you enjoy a better lifestyle and have more freedom of choice.
Now if you didn’t take action last time – and you don’t take action this time – then perhaps you’ve got more money than sense. Or, you’re not really serious about maximizing your property investments. Seriously – today or tomorrow you’ve got to make the time to put a call into your bank to request your reduction in interest rates.
P.S. Be sure to check back here and comment to let me know what the results you get.
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