Dropping $4 a day on coffee? You’re wasting more on your home loan

With the news Australians are wasting an estimated $4.2 billion a year on unnecessary home loan interest, that $4-a-day coffee habit is the least of your worries.
Hannah Tattersall

We’ve all seen the stats: spend $4 a day on coffee and it equates to almost $1,500 a year you could otherwise be saving. No one needs convincing how much you’d save if you kicked the ‘two coffees a day’ habit.

But what if we told you the money you spend on that morning latte is nothing compared to the amount you’re wasting on your home loan. You’d feel better, right? Well maybe for a minute.

An estimated $4.2 billion in waste

The truth is, Australians are wasting an estimated $4.2 billion a year on avoidable home loan interest. To put this in perspective, $4.2 billion a year is roughly half as much as we’re wasting on food – and more than double what we throw away on unused gym memberships. It’s also a hell of a lot of cups of coffee.

The figures come from the uno Home Loans Household Financial Waste Report, which also details the extraordinary amounts Australians are wasting on home loans by state and suburb.

New South Wales home owners are wasting more than $1.3 billion on unnecessary interest; Victorians are wasting $1.01 billion; and Queenslanders $730 million annually.

Households in Sydney’s western suburbs such as Liverpool, Warwick Farm and Prestons, have the highest rate of home loan waste, throwing away an estimated $14.9 million each year, closely followed by Victoria’s Werribee area, where households are potentially losing a collective $14.5 million annually.

The good news

The good news is, by being better informed and making some behavioural changes, Australian households could gain back billions of dollars in misspent mortgage interest.

uno estimates that per household, mortgage holders in New South Wales stand to gain $1,300 back in lower interest payments in the first year should they switch to a better home loan, while Victorians could gain back $1,200[1]. Despite having a comparatively lower volume of home loan waste, households in the ACT and Northern Territory could also be more than a thousand dollars better off on average if they had a better deal on their home loan ($1,300 and $1,200 respectively).

For example, a homeowner in New South Wales paying off a $400,000 mortgage on a 4.1% interest rate, could save around $1,200 annually in interest payments by switching their rate to a 3.8% interest rate.[2]

Already, customers who have signed up to loanScore, the cornerstone of uno’s Active Home Loan Management, have shown a median potential 3-year saving calculated at $5,200 if they switch lender.[3].

So, enjoy that flat white. Go on, have another one even. Because as far as uno is concerned, you’ve got much bigger fish to fry.

Hannah Tattersall
* Three year fixed rate, owner occupier, P&I loan with a maximum LVR of 95% and a loan amount >$150,000. 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.