According to new data, 77 percent Australians consider themselves to be money smart. Yet, 40 percent are not aware of the interest they pay on their home loan! Irrespective of the category you fall in, chances are, your home loan rate is highly uncompetitive, if you haven’t reviewed it in the past two years.
Ignorance about your current rate can cost you serious money. Even though you scored a competitive rate a couple of years ago, being complacent about the fact could turn out to be expensive.
According to Mandeep Sodhi, Co-founder and CEO of Australia’s first online mortgage marketplace, HashChing, much of major banks’ profit is sourced from the set-and-forget borrowers who are not refinancing to lower rates.
“You can save thousands of dollars on your home loan with a reduction of a few basis points on your interest rates,” says Mandeep. “It pays around to shop,” he adds, “as broker negotiated rates (compare here) could be up to one percent lower than lender advertised rates.
Valey Shah, one of HashChing’s customers, turned to the online mortgage marketplace after his bank rejected his request to reduce the rate on his mortgage. Mr Shah informed HashChing he was paying 4.54 percent on his mortgage, almost 50 basis points extra than what most Australians were paying at the time.
Realising that his bank was profiting at the cost of his ignorance, Mr Shah tried to set things right by requesting the bank for a lower rate but his request was turned down.
The solution: getting the right home loan
Finally, Mr Shah turned to HashChing, and they put him in touch with an experienced broker in his area who got him a rate of 4.09 percent with the same bank that had rejected him earlier! The mortgage broker called up Mr Shah's bank and informed the lender of Mr Shah’s intention to switch to a more competitive deal unless the bank matched the competitor’s offer.
No bank wants to lose a premium customer in these highly competitive times. Mr Shah's bank relented, offering him a much lower rate of 4.09 percent, saving Mr Shah $200 each month.
While Mr Shah could score a great deal with the same bank, home buyers should not be afraid of moving to a different mortgage provider if it means more savings for their kitty. Refinancing your loan might involve minor hassles in terms of paperwork and time involved but the pain is insignificant as compared to the savings you stand to gain, which amounted to $2,400 per year in Mr Shah’s case. By comparing home loans online, you can find competitive deals from small banks and other non-bank and online lenders, starting as low as 3.67 percent.
In case you haven’t reviewed your home loan of late, we strongly recommended you check your current interest rate – because you might just be ready to save thousands of dollars by switching.
HashChing is a borrower-friendly online mortgage marketplace, a first of its kind inAustralia. Powered by sophisticated algorithms, it is a tech platform that enables borrowersto access and compare broker pre-negotiated mortgage rates from over 60 lenders acrossAustralia. Besides, HashChing offers on-demand broker services wherein you can choosefrom verified mortgage brokers in your area, connect with them and discuss your requirement from the comfort of your favourite screen. Recognised for changing thelandscape of the mortgage industry across Australia, HashChing continues to innovate,helping Australians realise their foremost dream of buying a home.
* Photo credit: news.com.au
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