Homeowners need to start taking advantage of the increase in their property’s value by negotiating a better home loan interest rate with their lender. And Perth property owners are the best placed in Australia to take advantage of this. The general rule of thumb is that the more equity you have in your property, the better the interest rate you’ll get from a lender.
Financiers believe the higher the equity you have in your property, the lower the risk you will default on the loan, so the better the interest you receive. Over the past few years many people who took out a loan based on a small level of equity in the property would now have a much larger stake given Australia’s property boom. And that could mean a better interest rate.
Lenders base your home loan rate on your Loan to Valuation Ratio (LVR) – the size of the loan against the value of the property. An analysis by Compare the Market found that rates for borrowers with a LVR of 50-60 per cent could be up to 0.40 per cent less than some of the top rates on offer for borrowers with an LVR of 80-90 per cent.
David Koch For a property valued at $500,000, that could be a difference of $1015 on a borrower’s monthly repayments. That is a massive saving. The national median house value was 32 per cent higher in May 2024 compared to May 2019, according to figures from CoreLogic, meaning a large number of Australian property owners could be sitting on untapped equity.
In the 12 months to the end of June property owne.