The heat from the banks’ extra mortgage rate rises doesn’t seem to have cooled in the space of a week.

People are still angry and hurt: I guess having come through the pain of the Global Financial Crisis, only to have the banks lifting home loan rates higher than the Reserve Bank is raising them, is tough.

People are still angry and hurt: I guess having come through the pain of the Global Financial Crisis, only to have the banks lifting home loan rates higher than the Reserve Bank is raising them, is tough.

My response is to avoid the hysteria surrounding this issue and do what you can do: and that means taking action.

I have spoken about this before, but I can now add an extra step to my four-point action plan.

The first step is to become an expert on the current rate you’re paying – get the real figure.

Secondly, become an expert on the home loan market. Find the best rate in the market and find out exactly what your exit fee will be.

Then – thirdly – it’s time to negotiate with your current lender: ask if they can match the new offer.

Four: time to act. If your lender doesn’t want to compete for your business, and it’s beneficial to borrow from another lender, then it’s time to move.

The fifth step is an investment in yourself. It involves you taking the money you save on securing a cheaper home loan and investing it in your superannuation.

Before you wave that away as being unexciting, remember, self-funded retirement is now our personal responsibility. So the more you can put into a super fund now, the more you can take out later.

Let’s say you can save $100 a month by going to a cheaper home loan lender. I propose you put that into your super.
It doesn’t seem a lot but that’s $1200 a year and if you’re in a fund that’s returning an average 6.5 per cent over the long term, the compound effect is going to turn that money into something big over twenty or thirty years.

Have a look at an online super calculator – see what happens when you earn interest on the interest. 

Super shouldn’t be seen as a hindrance. It is heavily regulated by Canberra so its rules are very clear; it also has significant tax advantages that mean the savings can accumulate faster and the lump sum will be tax-free under certain conditions.

And when you take it out, it can be rolled into an income product that pays you a monthly amount while the capital continues to work.

When you include the cost-effective life insurance options, and the extraordinary choice of investments that most super funds offer, it’s a good way to save for retirement.

Lastly, super is compulsory. So if you have to be in it anyway, why not give it a boost… from the money you’re not paying to the bank?