Home owners are encouraged to refinance their loans.
Home owners are encouraged to refinance their loans.

Cheaper home loan deals that will save you thousands

Home loan customers are getting gouged by high interest rates despite banks continuing to reduce their offers during the pandemic.

Some of the best home loan offers now have a "1" in front but complacent customers are failing to take action to save.

New analysis by financial services firm Canstar quizzed 1000 Australians and found the following:

• The average owner occupier interest rate being paid is 3.73 per cent.

• The average investment loan being paid is 4.06 per cent.

On a $300,000 30-year owner occupier principal and interest loan a customer paying a rate of 3.73 per cent would have monthly repayments of $1386.

They would pay $199,000 in interest charges over the loan term.

But if the customer paid a rate of 2.5 per cent their monthly repayments would drop by $201 to $1185.

They would save $72,000 by paying $127,000 in interest charges over the loan term.

Chris Sheehy, 43, and his wife Jorgina, 39, recently refinanced the home loan on their four-bedroom house to save money. They were paying 3.19 per cent with ANZ and refinanced to 2.65 per cent with HSBC to save. Picture: Tim Carrafa.
Chris Sheehy, 43, and his wife Jorgina, 39, recently refinanced the home loan on their four-bedroom house to save money. They were paying 3.19 per cent with ANZ and refinanced to 2.65 per cent with HSBC to save. Picture: Tim Carrafa.

Programmer Chris Sheehy 43, and his human resources manager wife Jorgina, 39, from Mordialloc in Melbourne's southeast, recently refinanced the $715,000 loan on their four-bedroom home to save.

They were paying a rate of 3.19 per cent with ANZ, but have swapped to HSBC on a rate of 2.65 per cent and are looking to sell an investment property they own.

"Our repayments have dropped from about $4000 a month to $3200 a month," Mr Sheehy said.

"We have to set ourselves up and save money wherever we can, not just on our home loan but utilities and everywhere we can."

Canstar's spokeswoman Effie Zahos said mortgage customers should be chasing rates "definitely under three per cent".

"Pretend to be a new customer with your own bank and phone up and see what they will give you," she said.

"Then hung up and call back up and explain what you were offered."

But Ms Zahos said not everyone was in a position to be refinancing right now given millions of Australians were on JobKeeper or had suffered a hit to their income.

The Reserve Bank of Australia board meets on Tuesday and it's expected to keep the cash rate on hold at 0.25 per cent.

Mortgage Choice broker Tim Leonard said he had never been busier with customers refinancing and some were still paying rates with a "4" in front.

"There's a lot of people out there still paying too much on their mortgage," he said.

"They should be reviewing their mortgage every six months, look at your rates and call your broker."

sophie.elsworth@news.com.au

@sophieelsworth

 

BEST VARIABLE INTEREST RATES

• Loans.com.au, Smart Booster Discount Variable, 1.99 per cent, $1107 monthly repayment.

• Freedom Lend, Freedom Variable, 2.17 per cent, $1135.

• Reduce Home Loans, Super Saver Variable, 2.19 per cent, $1138.

• Community First CU, Accelerator Package Home Loan, 2.29 per cent, $1153.

• Homestar Finance, Star Essentials, 2.39 per cent, $1168.

 

BEST THREE-YEAR FIXED INTEREST RATES

• UBank, UHomeLoan, three-yerar fixed, 2.14 per cent, $1130.

• bcu, Residential fixed, 2.16 per cent, $1133.

• MOVE Bank, Complete Package fixed, 2.19 per cent, $1138.

• Bank First, Premier Package Home Loan, 2.19 per cent, $1138.

• Credit Union SA, Fixed Home Loan Package, 2.19 per cent, $1138.

*Based on a $300,000 30-year owner occupier principal and interest loan.

Originally published as Cheaper home loan deals that will save you thousands


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