Banking comparison site RateCity.com.au is calling on home loan customers to break up with the big four banks by switching to a lower rate lender, shaving tens of thousands of dollars off their home loans.
New research has revealed a family with a $350K loan could save $232 every month or $69K over the lifetime of their loan or by switching to the lowest rate lender on the market.
RateCity spokesperson Sally Tindall said 75 per cent of Australians still had their home loans with the big four banks, and that most could save with a lower cost lender.
“A lot of Australians don’t realise that ongoing variable rates are as low as 3.39 per cent right now. This throws a huge shadow of doubt over any “discounted” rate from a big bank that starts with a 4,” she said.
RateCity’s database shows there are currently dozens of home loan products on the market with a rate below 4 per cent, while the average discounted variable rate from the big banks is 4.46 per cent.
“If you think you’re being taken for a ride, vote with your feet,” she said.
“There’s no better way to send the big banks a message than to switch your mortgage to another lender.”
Tips to consider before switching
- Use a comparison site to compare home loan products to make sure you are getting a good deal.
- Weigh up how much you will save each month and over the lifetime of your loan by using an online mortgage calculator.
- Take a close look at the comparison rate. If it’s substantially higher than the interest rate, you know there’s a problem.
- Consider the costs associated with switching your loan, including discharge fees from your current bank and any upfront fees charged by the new lender.
- Use ASIC’s MoneySmart calculator to work out how long it will take you to recover your switching costs.
The above mortgage calculation assumes an owner-occupied principal and interest mortgage with 25 years remaining.
The customer switches from the average big four discounted variable rate 4.46% with an annual package fee $395, to a home loan rate 3.39% (Reduce Home Loans).
Switching costs: $1170. Calculations are estimates only.