Canstar: Do the sums and consider switching home loans
Borrowers should "do the sums" on their home loan options and change banks if the repayment savings exceed the cost of exit and application fees, Canstar Cannex financial analyst Mitchell Watson has said.
The advice came as research from Canstar noted that Aussies who defect from the "big four" banks to cheaper rivals can make huge savings within months, the Australian reported.
Indeed, the study found that a Commonwealth Bank (CBA) borrower with a $350,000 mortgage stands to save $3,211 over five years by refinancing with Newcastle Permanent Building Society.
According to Canstar, it would take customers just six months to recoup the CBA $350 "discharge fee" by saving $59 a month in repayments.
It was also observed, however, that CBA borrowers who exit the loan within the first four years will be hit with an additional $700 "exit fee", which would take 18 months to cover in repayment savings, the Australian newspaper said.
Canstar also warned Aussies looking to compare home loans that its calculations do not take into account CBA's plan to increase rates by a further 0.45 basis points tomorrow (November 5th), while Newcastle Permanent has not yet announced how high it will increase rates.
This article is brought to you by Mozo – Helping you compare home loans