Why home loan loyalty doesn't pay

By Mozo Editorial · Thursday, 27 September 2018 · 3 min read

Fact Checked

If you’ve still got a home loan with a big bank despite the recent rate hikes, it might be time to reconsider. New research from Mozo reveals that the big bank mortgage loyalty trap is costing Aussie borrowers $19 million a day in missed interest savings.*

That’s right, switching to the most competitive home loan on the market could deliver the average Big 4 bank customer up to $2,995 in savings each year**. So, why do so many of us stay put? Convenience is a factor for many, as is the mentality that switching is too much hassle. But there are signs this is changing, with the big bank's recent rate rises prompting many borrowers to take the plunge and ditch and switch for a better deal.

If you’re sick of paying the big bank 'lax tax', why not make today the day you review your options and see how much you can save by switching. Here are some of the top home loans on the market right now to get you started….

BANK BEATING HOME LOANS UNDER 4%

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Important disclosures and comparison rate warning*

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Comparison rate warning

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.

How Initial Monthly Repayments figures are estimated

Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. 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.

loans.com.au - Essentials Variable 90

3.64% variable rate (3.66% comparison rate*)
No ongoing fees, free extra repayments and free redraw
Mozo Experts Choice Best Low Cost Home Loan winner 2018

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Popular online lender loans.com.au offers a low-rate home loan that could save you thousands. With no monthly or ongoing fees, unlimited additional repayments and unlimited free redraws with no minimum redraw amount, it's no wonder loans.com.au is a multiple Mozo Experts Choice Awards winner. Available for loans of $2 million or less, with a 20% deposit.

Virgin Money - Reward Me Variable Rate Home Loan

3.68% variable rate (3.82% comparison rate)
Get 20,000 Velocity points for each $100K drawn at loan settlement
100% offset account

Find out more

With the Virgin Money Reward Me home loan, not only will you get a low variable rate and access to a 100% offset account to save on interest, for a limited time only you'll also receive 20,000 Velocity Points for every $100,000 drawn at settlement. And because Virgin Money believe in rewarding loyal customers, you'll also earn 1,000 Velocity Points each month and 30,000 points each 3 year anniversary. Other great features include free extra repayments and free redraw.

Tic:Toc - Variable Home Loan

3.57% variable rate (3.58% comparison rate)
No application, assessment, valuation or ongoing fees
World's only 'instant' home loan

Find out more

Online lender Tic:Toc is really shaking up the home loans market with its low rates and super speedy home loan approval process. The Tic:Toc Variable Rate Home Loan comes with no upfront or ongoing fees, free additional repayments and unlimited redraw, plus the flexibility to add on an offset account for $10 a month. To apply, click through to complete their simple application form and they'll have your home loan approved in just 22 minutes!

UBank - UHomeLoan - Discount Offer

3.59% variable rate (3.59% comparison rate*)
No upfront ongoing fees
Free extra repayments and redraw facility

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If you're after a loan that keeps things simple, then look no further than the UBank UHomeLoan Discount Offer. This loan features a low 3.59% variable rate (3.59 % comparison rate*) and comes with no upfront, ongoing or exit fees - talk about budget-friendly! You'll be able to borrow up to 80% of the property's value and make free extra repayments as you see fit. And while there is no offset account attached this loan, you'll be able to redraw any extra repayments to put towards unexpected bills or emergencies!

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*Mozo compared the typical variable loan rate of each of the Big 4 lenders against the best rate on the market to find the potential savings per customer and then multiplied this by the estimated number of variable owner occupier customers at each lender to come up with a collective figure of savings. Rates are based on an 80% LVR loan of $300,000 to owner-occupiers over a 30-year term. Calculations were done on 12 September 2018.

**Based on the highest published package rate of a Big 4 bank for a loan of $300,000 of 4.72% versus 3.44%, the lowest rate in Mozo's database.

^* 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.

^** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. 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.

^See information about the Mozo Experts Choice Home Loan Awards

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