Breaking up with your bank could save you $2,800 a year
Sally Tindall from RateCity estimates switching home loans could save a big bank customer more than $60,000 over the loan
We know it pays to shop around for a good deal when making purchases and the same principle should be applied when it comes to your choosing your bank.
If you have a home loan with one of the four big banks, it may be worth your while to compare and switch to a lower rate and save yourself thousands of dollars.
TODAY chatted to Sally Tindall from RateCity to hear her tips on how to hunt around for a better deal on your mortgage.
TODAY: Sally, so you say we can save all of this money just by switching banks. How does that work?
TINDALL: Our research shows that someone on a discounted variable rate with a big four bank could save $69,000 by switching to the lowest rate home loan in our database. That translates to a savings of over $2,800 a year.
TODAY: What do we need to consider before changing lenders?
TINDALL: The first thing you need to do is check your current rate, and find out which lenders are prepared to offer you a better deal. You can do this by jumping on our site, RateCity.com.au*, where you can compare loans from over 100 different lenders on the market.
Once you’ve found a few loans that you like, check for hidden fees, because they will really impact how much you can save. A quick way to do this is to look at our star ratings, which look out for hidden costs for you. Finally, use a refinancing calculator to make sure you’ll be ahead.
But, if you’re with a big four bank, or your interest rate is over 4% then chances are you’ll save thousands, probably tens of thousands.
TODAY: Are there any fees involved?
TINDALL: Yes — home loan fees are like death and taxes. You just can’t avoid them. But they aren’t like they were in the bad old days when banks charged whopping big exit fees. What you’re likely to encounter is a discharge fee of between $100 – $400. Your new lender might also charge you application fees but if they do, ask for them to be waived. Chances are they’ll be happy to toss them aside in order to get your business.
TODAY: Finally, it can be a hassle to switch banks – is there a way to haggle and get our bank to give us a better deal?
TINDALL: Refinancing is a small hassle, and I know it’s a lot of paperwork but the return on investment is huge. That said, if you’re just looking for a quick win then haggling is a great strategy – as long as you do your research. Before you call, write out a list of five or 10 lenders offering less – it’s often a grand slam they find hard to talk their way out of.
* In highlighting particular offers we are not making specific recommendations as this article does not cover all available products and may not compare all features relevant to you. Any advice provided is general in nature and does not take account of your needs, objectives or financial situation. Individuals should consider their own circumstances, and if in doubt seek appropriate advice, before proceeding.