If you have a home or investment loan, it’s probably your single biggest monthly expense. That’s why this is perhaps the most important message you’ll ever read, because, odds are, you’re paying way too much.
When it comes to home loans, even small improvements can produce major benefits.
As a major financial decision (perhaps one of the most significant ones of your life), always having the lowest cost home loan for your situation is critical.
Get it right, and you can set yourself up for financial security and a comfortable lifestyle.
Get it wrong (as most people unfortunately do) and you could end up:
- $ Paying a HUGE amount in extra interest to the Banks (for example, overpaying more than $201,103 in interest on a $450,000 loan over 30 years at 6%pa interest compared to the same loan at 5%).
- $ Taking the full 30 years to pay off your loan (many people never fully pay off their home loan over their lifetime).
- $ Being unable to properly invest for your future and becoming part of the 80% of Australians who end up on some form of government assistance in retirement (with access to retirement benefits being delayed to 70 years of age).
I know what you’re thinking… “Aren’t all loans really the same?”
Well actually, not at all!
Example: are loans all the same?
When I recently compared the true cost of 383 advertised variable home loans offered by 104 different lenders on a $450,000 home loan, the difference between the 10 least expensive loans and the 10 most expensive loans was a huge $599.50 every single month.
If you paid that $599.50 as extra repayments into the loan, you would save a massive $211,833 and cut over 10 years off your home loan.
These are the loans that lenders are paying to advertise; these are their best loans, discount packages, and special offers!
While you might be confident that your interest rate is not one of the more expensive ones, the difference between the cheapest loans and just the average loan was still a whopping $319.73 per month. This means that the average Australian home owner can pocket an extra $319.73 every month (or homeowners could use that money as extra repayments, saving $142,987 and being mortgage free 7 years earlier).