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The simple trick that could save you $2,000 on your home loan
Australians who refinance their mortgages and secure a saving of up to 1 per cent on their current rate could see their finances improve by $2,000 a year, yet hesitancy towards switching rates remains, new research has revealed.
The simple trick that could save you $2,000 on your home loan
Australians who refinance their mortgages and secure a saving of up to 1 per cent on their current rate could see their finances improve by $2,000 a year, yet hesitancy towards switching rates remains, new research has revealed.
Stats released by Aussie Home Loans showed that out of the approximate 6 million outstanding mortgages in Australia, less than 450,000 of those were refinanced in the last financial year.
This is despite the pressures put on household budgets due to COVID-19 restrictions, and the Reserve Bank of Australia dropping rates three times in just over a year.
According to Aussie, the research shows there’s a disconnect between mortgage-holders’ understanding of the opportunities to refinance, and their willingness to take action and gain favourable lending conditions while rates are low.
While most respondents (62 per cent) said they understand the importance of refinancing a home loan on a regular basis, only one in five (20 per cent) mortgage-holders in Australia have acted and refinanced their mortgage in the last 12 months.
Data released by the Lendi group has shown that those that do opt to refinance could save around $2,000.
CEO of Lendi Group, David Hyman, said the gap between mortgage-holders and those who refinance are staggering.
“Given the trend in interest rates over recent years, it’s shocking that over half of Australians haven’t ever refinanced their current home loan,” he said.
“While this can partly be explained by a knowledge gap when it comes to refinancing and what’s involved, bridging this gap with the help of an expert is not hard. It’s good to remember that reviewing your loan doesn’t always mean refinancing, and you may not even need to change lenders to get a better rate.”
Some of the reasons why Australians are not refinancing include believing it’s too hard or being unsure where to begin the process (22 per cent), not believing they can get a better deal (18 per cent), or due concern that they will end up worse off or having to pay more money (24 per cent).
“It’s important that Australians understand that reviewing a home loan does not have to mean that you will end up worse off. If you don’t understand the process, you can speak to a mortgage broker with no obligations, and they can help you understand your financial situation and what opportunities are available through refinancing,” Mr Hyman concludes.
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