The number one mortgage mistake

Rebeccah Elley

14 Jun 2017

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Key Points

  • Big bank home loan loyalty costs Aussies $6 billion a year

  • Smaller lenders can save borrowers thousands of dollars a year

  • Lowest home loan rates start from just 3.66%

Home loan loyalty is costing Australian mortgage holders a whopping $6 billion a year, according to new research from comparison site Mozo.com.au.

Despite a surge in smaller lenders offering mortgage rates under 4.00%, borrowers are wasting $17 million a day by sticking with big bank lenders instead of switching to a cheaper home loan.

“The most expensive mistake the average borrower could make is sticking with the same loan over a 25 to 30 year period, says Mozo Director Kirsty Lamont.

“You’re paying a lazy tax and missing out on thousands of dollars in switching savings.”

“Refinancing to a new home loan only takes a few hours and the savings that can be made are significant - it could be the easiest couple of thousand dollars you make this year.”

Top Home Loans in March 2018 - rates updated daily

  • Promoted

    Macquarie

    2.54% p.a. variable

    2.81% p.a.

    $1234

    Product details Close details
    Offset Home Loan Package

    Handy offset account to help pay your home loan off sooner. Up to 10 offset accounts per loan account available. Fee free access at ATMs. Waived credit card annual fee. $0 international purchase fees.

    • 2.54% p.a. variable

    • 2.81% p.a.

    • $0

    • $248.00 yearly

    • $400.00

    • yes - free

    • yes - free

    • yes

    • $0

    • 70.00%

    • $150,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Monthly

    Read our Mozo Review to learn more about the Offset Home Loan

  • Promoted

    loans.com.au

    2.48% p.a. variable

    2.50% p.a.

    $1234

    Product details Close details
    Smart Home Loan 80

    A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.

    • 2.48% p.a. variable

    • 2.50% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • $520

    • 80.00%

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Home Loan 80

  • Promoted

    HSBC

    2.09% p.a.
    fixed 2 years

    2.98% p.a.

    $1234

    Product details Close details
    Fixed Rate Home Loan

    Have the security of a fixed rate for 2 years with the option to split with one of the HSBC variable Home Loans. No ongoing monthly service fees or annual fees. Mozo Experts Choice Fixed Home Loan 2020^

    • 2.09% p.a.
      fixed 2 years

    • 2.98% p.a.

    • $0

    • $0.00

    • $300.00

    • yes - free up to $10,000 p.a.

    • no

    • no

    • $0

    • 80.00%

    • $50,000

    • $7,500,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Fixed Rate Home Loan

  • Promoted

    Athena

    2.34% p.a. variable

    2.34% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    • 2.34% p.a. variable

    • 2.34% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 60.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Celebrate Variable Home Loan

  • Promoted

    Hot Deal Up to $1,500 cash back on refinances (T&Cs apply)

    Homestar

    2.29% p.a. variable

    2.32% p.a.

    $1234

    Product details Close details
    Star Essentials Home Loan

    Low Cost Home Loan 2020 winner.^ A home loan packed with all the essentials and offering up to $1500 cashback and no ongoing fees. No Construction loans.

    • 2.29% p.a. variable

    • 2.32% p.a.

    • $515

    • $0.00

    • $535.00

    • yes - free

    • yes - free

    • no

    • $515

    • 80.00%

    • $150,000

    • $850,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinances receive up to $1,500 cashback or upfront fees waived on purchases for applications received by 31 October 2020 and settled by 31 January 2021.

    Read our Mozo Review to learn more about the Star Essentials Home Loan

  • Promoted

    UBank

    2.49% p.a. variable

    2.49% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.

    • 2.49% p.a. variable

    • 2.49% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 80.00%

    • $100,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Promoted

    Hot Deal $2,000 Refinance Cash Bonus (T&Cs apply)

    Suncorp

    2.68% p.a. variable

    2.69% p.a.

    $1234

    Product details Close details
    Back to Basics Special

    No monthly account keeping fee, no ongoing annual fee and no loan establishment fee on new lending of $150,000 or more. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.

    • 2.68% p.a. variable

    • 2.69% p.a.

    • $0

    • $0.00

    • $350.00

    • Yes - free

    • first redraw per month free

    • no

    • $0

    • 80.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinance from another lender to receive a $2,000 cash bonus for loans of at least $250,000 or $3,000 bonus for loans over $750,000. Available for loans with an LVR <90% and applications made by 18 December 2020 and settled by 26 March 2021.

    Read our Mozo Review to learn more about the Back to Basics Special

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

Here are Lamont’s three top tips for getting a better home loan deal:

1. Compare your rate with the best on market

“Look beyond the big four banks to find the best value. Smaller non-bank and online lenders like loans.com.au, UBank and Newcastle Permanent offer some of the lowest home loan rates in the market”, says Lamont.

To research the best value home loans, use a reputable comparison website like Mozo.com.au to compare home loans side by side and avoid wasted hours spent visiting each lender’s website.

2. See if you're up for any switching costs

Once you’ve compared the best rates to find out how much you can save by switching, Lamont says the next step is to work out any costs involved in refinancing.

“You might be charged a discharge fee from your current lender or an upfront fee by the provider you’re switching to. In most cases however, the savings to be made by switching will outweigh any refinancing costs.”

3. Choose a loan with flexible features

Lamont’s last piece of advice is to create a shortlist of the types of features you would like in your new loan.

“Features like an extra repayments facility and offset account can help you to pay down your home loan faster and save even more on interest charges,” adds Lamont.

Want to see if you can save thousands on your home loan?

Mozo compares more than 80 lenders to help you find the best value home loan for your needs. Compare now >>

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