Had your home loan for 3+ years? You’re probably paying too much, warns ACCC

We can help you work out whether your current home loan deal is costing you too much in a moment – but first, here’s how much you could save.
Meredith Williams

If you’ve had your home loan since before Trump was President, and you haven’t checked in to make sure you’re still getting a competitive rate, now is the time to do something about it.

This is the advice from the Australian Competition and Consumer Commission (ACCC), who warns that those who have a mortgage that’s at least three years old are likely to be paying too much for their home loan.

But what exactly is the definition of “too much”, you may be wondering?

“Too much” is when you’re paying even one dollar more than you need to be paying for your home loan – why pay more for the exact same product when you don’t need to?

We can help you work out whether your current home loan deal is costing you too much in a moment – but first, here’s how much you could save.

Check your loanScore now

Big savings for borrowers who refinance

The ACCC’s Home Loan Price Inquiry Final Report includes a number of recommendations for lenders to be more transparent and to reduce barriers to switching for borrowers.

This is because, according to the ACCC report, around half of all variable rate loans are at least four years old (as at December 2019).

If you’re one of those borrowers with an older mortgage, with so many competitive home loan offers in the market right now, you have the potential to save thousands of dollars by switching your loan.

The ACCC provided an example that stated an existing borrower with an older $250,000 loan is likely to be paying 0.58% more than a new borrower in 2020, and is therefore paying $17,000 more for their home loan (over the life of the loan).

The Australian Financial Review also reviewed this data but put the savings closer to $11,700.

Either way, it’s clear – there are big savings to be made by switching your home loan to a better deal.

Our own calculations confirm this. Using our refinancing calculator, we calculated that if you have a five-year-old variable rate loan and you’re paying 3.19% for your home loan, you could switch lenders and drop that rate to 2.19%.

uno expert broker Paul Sealy calculates that with such an interest rate reduction on a $500,000 loan balance, your monthly repayments would drop from $2,421 to $2,166 – a whopping saving of $255 a month.

That’s $3,060 per year in your account balance, instead of the bank’s coffers. And all you have to do to make this massive saving is switch to a better deal by refinancing.

How to get started today

Think about it: if you were at the fuel station putting petrol in your car, and the advertised rate was $1.10 per litre, would you be happy to pay $1.30 per litre?

No one likes paying more than they need to for anything, and when it comes to your mortgage, overpaying can cost you thousands – even tens of thousands, in the long run.

The good news is, it only needs to take 2 minutes to run a quick loanScore check. It’s fast, free, and in a matter of minutes you’ll have an idea of how competitive your current mortgage is, and how much you could save by refinancing.

Check your loanScore now

Image credit: wayhomestudio

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Meredith Williams

* Two year fixed rate, owner occupier, P&I package loan with a maximum LVR of 70% and a loan amount >=$150k. Lender rates and products may change. We cannot suggest you remain in or switch to any loan until we complete our assessment. Fees and charges apply. ^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rate is calculated on the basis of a loan of $150,000 over a term of 25 years. ± All loan applications are subject to uno assessment and lender approval. uno does not guarantee that it will be able to find a customer a better loan than the one they currently have or to save them money.