According to the government’s MoneySmart website — “‘Switching home loans could potentially save you thousands of dollars in interest or let you take advantage of features offered by another loan.”
In July 2011 lenders were banned from charging exit fees on home loans. Couple this with no mortgage stamp duty on your home loan which was charged in the past, and the government is making it the easiest it has ever been for borrowers to shop around for a better deal on a home loan.
At any given time, refinancing represents around a quarter of new home loans.
If shopping around for a loan frightens you, don’t worry. I recommend going about it in a much simpler way; one that requires no financial discipline and can virtually be put on autopilot on your behalf, but we will discuss that at the end of this section.
A survey for Ernst & Young by Quantum Market Research found that 65% of borrowers were looking to be rewarded for loyalty with lower fees and better rates.
However, a third of potential switchers admitted that they gave up because there were too many choices to wade through and because the information was too complex. In other words, homeowners would like a better deal, but many of them find the hunt for one to be too hard or that they lack the time the hunt requires.
It is vital that you keep assessing your financial needs and remain watchful for opportunities to get a better deal on your loan – or the easy way is to have someone do it regularly for you.
Getting a cheap loan is the first step, but monitoring it regularly to make sure you always have a cheap loan is the next step. Lenders are notorious for offering special deals and limited time offers for new borrowers, but not passing this onto existing customers. We regularly find clients with a loan taken out years ago with a lender where new clients have the exact same loan at a cheaper rate.