Aussies waste $4 billion on home loans every year. Here’s how to stop
According to a recent report by uno Home Loans, Australian homeowners have taken their eyes off the prize. Sure, they may have searched high and low for great rates when they first locked in their mortgage, but many homebuyers have failed to stay vigilant and are missing out on considerable savings.
uno’s research has unlocked the key drivers of Australia’s household financial waste. It may come as a surprise that mortgage interest rates ranked amongst the highest on the list, surpassed only by the $9 billion a year we literally throw away in food waste.
So why is ‘home loan waste’ so insidious?
uno Home Loans CEO, Anthony Justice, believes consumer complacency can be explained by several factors.
“Most homeowners purchase or refinance their home feeling confident they’re on a good rate – and they usually are. The cracks only begin to show a few years down the track, by which time consumers no longer think about their home loan as something they should be fighting to get a good deal on,” Anthony said.
Indeed, once the lustre of the initial purchase has worn off, we’re all a bit guilty of home loan lethargy. Refinancing our loans often gets filed away into the too hard basket. We let things slide and stay locked in with our existing mortgage provider.
Yet fast forward a few years and Anthony suggests external factors can have a major contribution to how ‘good’ a deal your home loan really is.
Think of it this way: there’s the current interest rate. The ups and downs of the property market. Changes to different loan offerings and even your own financial circumstances. Maybe you’ve had a wage increase – or maybe your business is in a bit of a slow-down. All these elements will have an impact on your finances. So, after a couple of years, that ‘good deal’ could have become a source of significant household financial waste.
However, don’t beat yourself up. You’re not alone. uno’s research found 53 per cent of homeowners don’t even know their current interest rate and almost six in ten (59 per cent) have never even asked their bank for a better rate. So, what can you do now that will make a difference?
Well, to address the issue, uno have launched Active Home Loan Management, a service which works to ensure a customer’s home loan is as healthy as possible for the life of the loan. The starting point of which is their loanScoreTM tool, which allows customers to check the health of their mortgage in just two minutes.
“It analyses their loan against thousands of home loan products to score it and show potential savings,” Anthony explained. “We now have the technology to analyse the market daily and alert customers when we find savings that would motivate them to take action.”
The bottom line is, if you haven’t checked in on the health of your home loan in a few years – it’s time to refocus. In doing so you could save hundreds of dollars off your monthly payments and so much more on the life of your loan.
This post appeared on Your Money& Your Life and is republished here with permission.