The average Australian homeowner is paying more than $37,000 in extra interest over the life of their home loan due to the loyalty tax, there are things you can do to save yourself from excess repayments.
Without frequent review of your home loan, it’s easy to fall into the common lender trick where borrowers with older mortgages are typically charged a higher interest rate than borrowers with new loans. This was actually confirmed in a study by the Reserve Bank of Australia (RBA) last year.
Banks are usually more focussed on obtaining new clients, rather than worrying about keeping their old ones.
For example, RBA June 2021 figures show the average difference in home loan interest rates between new and existing owner-occupier borrowers was 0.46%.
On an average loan size of about $400,000, that 0.46% difference on a 30-year loan means a borrower would pay an additional $37,462 in interest over the life of the loan.
That’s $1,249 per year, per household.
Because of this, it’s important to revisit your home loan rate frequently to ensure you’re not paying unnecessarily high rates. With a review by an experienced broker, you can get more information about your current rate so that you can be ready to renegotiate with your lender or move banks altogether.
We can help
We have multiple experienced brokers and staff on our team that can walk you through the process of reviewing your rates. It’s important to stay informed and comfortable with your home loan and we can help.
Of those surveyed in the CoreData report, one-in-three people (36%) asked their lender for a drop in their interest rate but were rejected.
But with competition among lenders quite fierce right now, it’s important to know the power is in your hands.
“Rates are at an all-time low at the moment, so it’s at a crucial time when Australians need the money in their pockets, not the banks,” explains Athena CEO and Co-Founder Nathan Walsh.
Adds the RBA:
We reward loyalty
We like to reward loyalty around here. We’ll always have your back.
So, if you haven’t refinanced recently, get in touch today and we’ll work with you to help save you thousands of dollars in interest repayments.
That might involve renegotiating with your current lender or looking around for another lender who will give you a fairer rate.
Either way, we’ll make sure your lender isn’t taking advantage of your loyalty.
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