Two Mates. Different Rates. Why Your Home Loan Rate Isn't the Same as Your Mate's
Was chatting to an old agency mate last weekend. He'd been catching up with a friend who was proudly rattling off the great rate he'd just locked in on his mortgage. His question to me afterwards: "Why don't I have that rate?"
Good question. On paper, the two of them looked similar similar jobs, 2 kids, live in neighbouring suburbs and same kind of lifestyle. But different rate.
THE LADDER LOWDOWN:
Your rate isn’t down to a single factor. Its a combination of factorws that stack together.
Small differences can produce a significantly different rate. Like if your LVR is 79% your rate could be a lot lower than 81%.
Get expert advice and negotiation. We help find the best rate for your situation.
More than rate. We need to find the right loan structure.
5 reasons why your rate is different.
We break down 5 reasons why it could be different.
1. Your loan-to-valuation ratio (LVR)
Your LVR is simply your loan size divided by your property value. Borrow $790,000 against a $1,000,000 property and you're sitting at 79% LVR. Borrow $810,000 against the same property and you've tipped over to 81%.
That two percentage point shift can be the difference between a sharp rate and a noticeably higher one. Lenders price risk in bands, and 80% is one of the most common thresholds in the market — cross it, and pricing (and often lenders mortgage insurance) steps up. Two borrowers who look identical everywhere else can land on very different rates purely because of where their LVR sits relative to that line.
3. How your loan is structured
Fixed vs. variable. Offset vs. no offset. Interest-only vs. principal and interest. Owner-occupied vs. investment. Each of these carries its own pricing, and large variances can occur between them. Two mates who both think they've got a "standard home loan" might actually be sitting in quite different pricing categories once you look at the structure underneath.
4. Timing and negotiation
Rates move. What's on offer today may not be on offer next month, so two people applying weeks apart can land on different numbers purely due to timing. On top of that, a broker with strong lender relationships can often negotiate a sharper deal than a borrower walking in and taking the advertised rate at face value.
5. The small details
Property valuations, which bank you use, and which product features you choose can all be optimised for a better rate. These are the details that don't show up in a casual BBQ conversation about "what rate are you on," but they're often where the real difference gets made.
A reminder: a great rate is just a starting point
It's easy to get fixated on rate. It's the number everyone compares at a BBQ, after all. But rate is only one part of the equation. Our primary focus is finding the best loan structure for you and your situation:
Variable, fixed, or a mix?
Keep, shorten, or extend the loan term?
Loan splitting for investing?
More loan features, or a no-frills loan with a lower rate?
We spend time upfront to try and get you the best of both worlds — a competitive rate and the right structure.
Final Thoughts
If you'd like to review your current loan structure and rate, we'd love to chat.
📞 0414 877 724 📧 will@ladderfs.com.au
🔗 Book a call at www.ladderfs.com.au/book-now