Home loan switching brings both benefits and charges

Bank customers who compare home loans should weigh up the savings made from lower interest rates against the cost of leaving a mortgage.

That is according to a report for the Australian carried out by Canstar Cannex which found that customers with a $300,000 mortgage who switched from Westpac to NAB would save $50.88 a month on their repayments.

Westpac’s increase in interest rates by 45 basis points last week was the highest of the major banks, with its standard variable rate now at 6.76 per cent compared to NAB’s 6.49 per cent.

However, the report said that while a mortgage switch would reduce monthly repayments, any exit from a Westpac mortgage held for less than four years would result in a $900 exit fee, a $250 discharge fee and then a new application fee such as the $600 fee for a NAB home loan.

"A lot of borrowers when they refinance can be sidetracked by focusing solely on the interest rate and be blinded to the fees which go with this type of transaction," Cannex financial analyst Mitchell Watson told the news provider.

This week, NAB placed staff members outside Westpac’s flagship branch in Martin Place, Sydney, in an attempt to attract Westpac customers to its lower standard variable mortgage rate.

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