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

  • loans.com.au

    3.64% p.a. variable

    3.66% p.a.

    $1234

    Product details Close details
    Essentials Variable 80

    A low-rate home loan that could save you thousands. No monthly or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount. Winner of two Mozo Experts Choice Awards 2018 - Investor Home Loan & Low Cost Home Loan.^

    • 3.64% p.a. variable

    • 3.66% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $50,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Essentials Variable 80

  • UBank

    3.59% p.a. variable

    3.59% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    A low rate Home Loan with no bank fees on variable rate loans. Easy & fast to apply. Choose between flexible repayments and make extra repayments for free on a variable rate home loan.

    • 3.59% p.a. variable

    • 3.59% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes

    • no

    • 80.00%

    • $200,000

    • $699,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

  • HSBC

    3.59% p.a. variable

    3.61% p.a.

    $1234

    Product details Close details
    Discounted Home Value Loan

    Discounted rate for the life of the loan. A relationship manager to help you through the application process.

    • 3.59% p.a. variable

    • 3.61% p.a.

    • $150

    • $0.00

    • $300.00

    • yes - free

    • yes - free online

    • no

    • 90.00%

    • $50,000

    • $7,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Discounted Home Value Loan

  • Bank Australia

    3.76% p.a. variable

    3.77% p.a.

    $1234

    Product details Close details
    Basic Home Loan Special

    A Basic Home Loan which offers a competitive interest rate and other features to make your home or investment loan more affordable. Option to fix full loan or split between fixed and variable.No establishment fee until 31/03/2019. Redraw available.

    • 3.76% p.a. variable

    • 3.77% p.a.

    • $0

    • $0.00

    • $250.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $10,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Basic Home Loan Special

  • Virgin Money

    3.73% p.a. variable

    3.87% p.a.

    $1234

    Product details Close details
    Reward Me Variable Rate Home Loan

    Receive 1,000 Velocity Points for every $10,000 drawn at settlement. Access a 100% offset account to save on interest.

    • 3.73% p.a. variable

    • 3.87% p.a.

    • $150

    • $10.00 monthly

    • $320.00

    • yes - free

    • yes - free

    • yes

    • 80.00%

    • $500,000

    • $749,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Reward Me Variable Rate Home Loan

  • Newcastle Permanent

    3.89% p.a. variable

    4.29% p.a.

    $1234

    Product details Close details
    Discounted Variable Home Loan Premium Plus Package

    Experts Choice - Australia's Best Customer-Owned Banking & Home Lender of the Year 2018.^

    • 3.89% p.a. variable

    • 4.29% p.a.

    • $0

    • $395.00 yearly

    • $0.00

    • yes - free

    • yes - free

    • yes

    • 90.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Discounted Variable Home Loan Premium Plus Package

  • ME

    3.89% p.a. variable

    3.91% p.a.

    $1234

    Product details Close details
    Basic Home Loan

    No fees to redraw & low variable rate. Meet a mobile banker at a time or place that suits you.

    • 3.89% p.a. variable

    • 3.91% p.a.

    • $400

    • $0.00

    • $350.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $40,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

*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 $150,000 over 25 years.

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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