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How to fake a pay rise
Would you like to increase your disposable income by 5 to 10 percent, but can’t convince your employer that you deserve a pay rise? There may be another way to beef up your spending (or saving) money without having to wrestle the extra money from your boss, and the solution involves shopping!
For the average Australian, the answer could be as simple as shopping for more suitable financial products to suit your circumstances. All you need to work out is the interest rates and fees you’re currently paying on various products and determine how they stack up with others on the market. Switching to cheaper alternatives could save you thousands of dollars each year – potentially more than a pay rise!
Take a home loan, for example. A $400,000 mortgage paid at a rate of 7.3 percent interest (the average of the big four’s standard variable rate as at February 15) will cost you around $2900 per month to service and you’ll end up forking out more than $471,000 in interest over 25 years.
By switching to one of the best rates in the market at around 6.14 percent you could cut your monthly repayments by about $290 – or a whopping $87,800 over 25 years. This is equivalent to a 6 percent pay increase per annum for guys and 9 percent rise for ladies earning the median national wage, Australian Bureau of Statistics figures show.
Go one step further and maintain higher repayments – reinvesting your ‘pay rise’ back into your home loan – and you could shave 5 years off your loan term, further reducing your interest bill by almost $90,000.
Granted, there are switching costs to consider when refinancing with another lender – not to mention the time it takes to complete the paperwork for your new mortgage. But financial costs are typically recouped within the first year of paying a lower interest rate, so it’s time and money well spent.
When applied to other financial products; such as credit cards; car or personal loans; and even savings and everyday accounts, these simple steps can result in big savings. But for even bigger savings, try implementing these money management tips:
- Devise a budget – the government’s MoneySmart website offers a comprehensive budgeting tool
- Do your research – compare home loans and other financial products online and then go back to your lender, most will be willing to negotiate rates to keep your business
- Consider opening an offset account linked to your home loan – you could save thousands of dollars in interest by doing so
- Balance transfer cards can be a great way to clear credit card debt, but beware the traps – read the terms and conditions before signing on the dotted line.
Disclaimer
This article is over two years old, last updated on February 13, 2012. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
Compare home loans in Australia
5.99%
5.90%
$3,218
Australian Credit Licence 234945
Fees & charges apply
- Promoted
- 2024 Award Winner
- Special
- Owner Occupied
- Variable
- 20% min deposit
- P&I
6.39%
6.40%
$3,342
Australian Credit Licence 233714
Fees & charges apply
- Promoted
- Cashback
- Owner Occupied
- Variable
- 20% min deposit
- P&I
6.29%
6.20%
$3,311
Australian Credit Licence 234945
Fees & charges apply
- Promoted
- Special
- Investor
- Variable
- 20% min deposit
- P&I
6.84%
7.16%
$3,611
Australian Credit Licence 233714
Fees & charges apply
- Promoted
- Owner Occupied
- Variable
- 5% min deposit
- P&I
7.09%
7.09%
$3,563
Australian Credit Licence 234527
Fees & charges apply
- Promoted
- Cashback
- Owner Occupied
- Variable
- 10% min deposit
- P&I
6.95%
7.15%
$2,896
Australian Credit Licence 234945
Fees & charges apply
- Promoted
- Investor
- Variable
- 20% min deposit
- Interest Only
7.20%
6.90%
$3,000
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- Promoted
- Investor
- Variable
- 40% min deposit
- Interest Only
6.49%
7.25%
$2,704
Australian Credit Licence 234527
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- Promoted
- Cashback
- Owner Occupied
- Fixed 2 years
- 10% min deposit
- Interest Only
7.24%
7.56%
$3,183
Australian Credit Licence 233714
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- Promoted
- Investor
- Variable
- 30% min deposit
- Interest Only
7.46%
7.27%
$3,108
Australian Credit Licence 230686
Fees & charges apply
Tailored Home Loan
- Owner Occupied
- Variable
- 10% min deposit
- Interest Only
7.84%
7.84%
$3,806
Australian Credit Licence 234527
Fees & charges apply
Standard Variable Investment Loan
- Cashback
- Investor
- Variable
- 20% min deposit
- P&I
9.38%
9.52%
$4,327
Australian Credit Licence 234945
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Investment Standard Variable Rate Home Loan
- Investor
- Variable
- 5% min deposit
- P&I
Product database updated 28 Dec, 2024
Fact Checked
Promoted home loans
Variable Rate Home Loan LVR < 80%
Real Time Rating™
- 2024 Award Winner
- Special
- Owner Occupied
- Variable
Interest rate p.a.
5.99%
Comparison rate* p.a.
5.90%
Australian Credit Licence 234945
Fees & charges apply
Basic Home Loan
Real Time Rating™
- Cashback
- Owner Occupied
- Variable
- 20% min deposit
Interest rate p.a.
6.39%
Comparison rate* p.a.
6.40%
Australian Credit Licence 233714
Fees & charges apply
Variable Rate Home Loan LVR < 80%
Real Time Rating™
- Special
- Investor
- Variable
- 20% min deposit
Interest rate p.a.
6.29%
Comparison rate* p.a.
6.20%
Australian Credit Licence 234945
Fees & charges apply
Basic Variable Rate (Flexi First Option) Home Loan
Real Time Rating™
- Owner Occupied
- Variable
- 5% min deposit
- P&I
Interest rate p.a.
6.84%
Comparison rate* p.a.
7.16%
Australian Credit Licence 233714
Fees & charges apply
Product data updated on 28 Dec 2024
