In this age of disruption, many traditional products and services are facing competition from more innovative and cost-effective providers.  The big four have traditionally dominated the Australian mortgage market through their direct home loan products. However, in recent years, their market share has been slowly eroding due to competition from second tier and online providers.   Due to increasing competition, there are thousands of lending products available, including lesser-known providers who can offer equivalent or superior loan products at a much-reduced rate.

Many lenders (some backed by a big four bank) are now offering online lending platforms with comprehensive features such as redraw facilities, credit cards, offset accounts and the ability to ‘split’ the loan between fixed and variable rates.  The lower costs to manage these products are often passed back to the consumer via reduced interest rates and lower ongoing fees.

The larger banks often take existing clients for granted, and rely on the mentality that customers will remain loyal to the bank they have been with since they started their first savings account.  Unfortunately, banks do not always reward customers for their devotion!  Homebuyers and existing mortgage customers may not consider the benefits of shopping around or switching their existing home loan to an alternative lender.  This misplaced loyalty may cost thousands of dollars in interest payments and fees over the life of a home loan.

If you review your other bills such as phone, electricity and insurance to save money, it makes sense that you review what is most likely your largest expense!  The savings realised over the life of a home loan could amount to thousands of dollars.

As an example, in a recent client comparison to refinance a variable principal and interest home loan of approx. $300,000 from a major bank, a reduction of 0.52% in the interest rate saved $150 per month ($1,800 p.a.), with a potential saving of nearly $60,000 in interest payments and fees over the 30-year term of the loan.

There are many issues to consider before refinancing your home loan.  Please contact one of our lending specialists to determine the costs and benefits, and to discuss your options. One of our friendly mortgage brokers might be able to save you thousands over the life of your home loan/s.