5 things the banks don’t want you to know about home loans

In a competitive landscape, there are multiple ways to get the best value-for-money from your mortgage. Here’s some classified information that the banks would like to keep on the down low.5 things the banks don't want you to know about home loans 2

The Australian home loan market is both competitive and saturated, and as a borrower you have leverage when it comes to getting the most out of your home loan and minimising your repayments, fees and interest charges. With some comparative research and due diligence, you can become more savvy in the way that you manage your home loan in order to reap the benefits of useful features that are available on the market.

Here are 5 things that your lender doesn’t want you to know.

1. Rates are negotiable

One of the biggest things your bank doesn’t want you to know is that you have the right to ask for a rate discount, and that negotiating a better rate is straightforward. If you’ve noticed that your lender is offering a discounted rate to new customers, or that other lenders are providing a more competitive rate, you should simply contact your current lender and request a rate discount.

Most lenders have customer service teams that are focused on retaining your business, and you’d be surprised at how many lenders will be willing to budge in order to keep your account-- all you have to do is ask.

While the banks don’t want you to know how easy it is to negotiate for a better rate, they also don’t want you to know just how much you can save. Even a 0.5% rate reduction could lead to big savings.

To demonstrate, if you took out a $500,000 mortgage at 5.5% interest over 30 years, your monthly repayments would be $ 2,838.95.

Without discount, interest rate at 5.5%

Mortgage Amount Interest Repayment Term Monthly repayments
$ 500,000 5.50% 30 years $ 2,838.95

If you then contacted your existing lender and asked for a 0.5% rate discount, your monthly repayments would shrink to $ 2,684.11- a monthly saving of $154.84, or $1,848 per year.

With discount of 0.5%, interest rate at 5.0%

Mortgage Amount Interest Repayment Term Monthly repayments
$ 500,000 5.0% 30 years $ 2,684.11

With discount of 0.5%, interest rate at 5.0% .

Mortgage Amount Interest Savings
$ 500,000 5.0% $ 154.84 per month
$ 500,000 5.0% $1,848.08 per year

2. It’s easy to refinance

Lenders are tight-lipped about the ease of refinancing to another lender (which is why the above holds true-- they would rather negotiate your rate than loose your account altogether). Although it’s essential that you carefully evaluate the switching costs involved when refinancing to a new lender, quite often refinancing can lead to significant cost savings in the form of a lower rate or more suitable features.

Learn more about the refinancing process and use our switching cost calculator to see if switching to a new lender would make financial sense for you.

3. Bi-monthly is better

While you may be aware that making additional repayments and using an offset account can help you pay down your mortgage sooner, most lenders don’t want you to know that if you make bi-monthly repayments (as opposed to monthly) repayments, you could pocket a sizeable saving.

To illustrate, if we take a $350,000 mortgage with 5.5% interest, if you made bi-monthly repayments rather than monthly repayments, you would save $72,631 in interest and you would pay down your mortgage 5 years and 1 month earlier-- the numbers speak for themselves.

The difference in interest paid

Interest paid bi monthly 3

The difference in loan length

Time left to pay bi monthly 3

4. Fees are not mandatory

Another untold secret of the home loan industry is that there are many home loans available without standard fees such as discharge fees, application fees or ongoing account-keeping fees. Evidently, your lender would prefer that you didn’t know this.

It’s worth shopping around for a home loan that offers minimal ongoing or discharge fees so that you can focus on meeting your repayments. In particular, if you’re thinking of locking in your rate for a fixed term, you should be wary of lenders that will charge hefty break fees.

If you’d like to minimise your account-keeping fees, compare home loans that waive ongoing fees.

5. Specialist lenders can help

If you have an undesirable credit history or you’re receiving government benefits, most of the big banks are hush-hush about the number of niche lenders and building societies that may have more lenient lending criteria. Why do the big banks want to keep this classified? Because they’d rather charge you a higher interest rate (to compensate for your poor credit history) than have you run to a competitor that may be more forgiving about your credit status.

A mortgage broker can be highly useful in terms of drawing upon a diverse range of lenders to find one that will suit your borrowing needs, especially if you are a non-conventional borrower.

Now that you know what the banks don't want you to know, compare current refinancing deals below

Rates last updated December 14th, 2018
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.59%
3.59%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.59%
3.61%
$0
$0 p.a.
90%
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.
3.64%
3.66%
$0
$0 p.a.
80%
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2000000 from a convenient online lender.
3.57%
3.58%
$0
$0 p.a.
80%
Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.
3.64%
3.64%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.54%
3.57%
$0
$0 p.a.
80%
A competitive variable essentials interest rate product aimed at refinancers looking to switch to a lower rate.
3.74%
3.74%
$0
$0 p.a.
80%
A basic owner-occupier home loan with a low variable rate that requires a 20% deposit.
3.75%
3.75%
$0
$0 p.a.
70%
A simple mortgage with no application or ongoing fees that has extra repayments plus split and redraw options. Requires a 30% deposit.
3.49%
3.53%
$250
$0 p.a.
80%
A very low variable interest rate for borrowers with a 20% deposit. Add a 100% offset account for $10 a month.
3.54%
3.58%
$0
$0 p.a.
80%
Get a competitive rate, save on fees and access a 100% offset account plus redraw facility. $900 cashback offer.
3.80%
4.05%
$0
$0 p.a.
70%
Earn tens of thousands of Qantas Points to spend on flights, hotels and more with this variable owner occupier mortgage. Competitive variable rate mortgage that requires a 30% deposit.
3.68%
3.82%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (for a limited time, subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.88%
4.51%
$0
$395 p.a.
90%
Lock in a very competitive 2 year rate and get package discounts on your credit card and offset account. $1,500 cashback available (conditions apply).
3.79%
3.80%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000. Plus $1,500 cashback offer for eligible refinancers.
3.85%
3.85%
$0
$0 p.a.
80%
Low fee loan with extra repayments. Pay no application and ongoing fees and take advantage of split and redraw options.
3.84%
3.85%
$0
$0 p.a.
70%
Keep your LVR at 70% or below and enjoy a special discounted rate. Also, pay no application or ongoing fees.
3.89%
3.91%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.64%
3.64%
$0
$0 p.a.
70%
A basic variable home loan that offers a competitive interest rate with no application fees and no ongoing fees.
3.75%
4.72%
$0
$299 p.a.
95%
Owner-occupiers can enjoy a discounted fixed rate, a rate lock feature and the ability to make additional repayments.
3.79%
4.87%
$0
$395 p.a.
95%
Low deposit home loan. Enjoy flexible repayment options while paying limited fees.
3.89%
4.27%
$0
$395 p.a.
80%
New borrowers or refinancers can get a discounted rate with this package loan.
3.59%
3.63%
$495
$0 p.a.
90%
Get a low variable interest rate and buy a property with just a 10% deposit. 100% offset account attached.
3.79%
3.79%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.87%
3.91%
$0
$10 monthly ($120 p.a.)
90%
Get Velocity Frequent Flyer Points at settlement, monthly and every three years, plus the option to make up to $10,000 a year in extra repayments.
3.68%
3.70%
$0
$0 p.a.
80%
A competitive variable rate mortgage for owner occupiers that comes with a no fee debit card with a $5,000 limit.
3.87%
3.91%
$600
$0 p.a.
95%
A home loan with no ongoing fee and a redraw facility that you can borrow up to 95% LVR.
3.64%
3.59%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.74%
4.13%
$0
$349 p.a.
90%
Get a sharp rate plus package discounts and a 100% offset account.
3.69%
4.12%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
4.17%
4.21%
$600
$0 p.a.
95%
Variable rate home loan from one of the big 4 banks. Available with just a 5% deposit.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
3.79%
3.82%
$0
$0 p.a.
80%
An essentials variable investor mortgage with a high borrowing amount so you can fund a large purchase.
3.75%
4.00%
$0
$248 p.a.
70%
Borrowers with a 30% deposit can get this competitive rate. Cut down on interest costs with a 100% offset account.
3.70%
3.70%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at $70% or below with this innovative online lender.
3.59%
3.58%
$0
$0 p.a.
80%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for a small fee.
3.84%
3.84%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.62%
3.62%
$0
$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only. Eligible borrowers can get a 15% discount on home and contents insurance for the life of their loan.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.69%
4.08%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.71%
3.71%
$0
$0 p.a.
70%
A variable rate home loan that has a lot of flexible features. This loan has a 100% offset account.
3.89%
3.94%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.77%
3.82%
$600
$0 p.a.
90%
Buy your home with just a 10% deposit, few fees and a reasonable interest rate.
3.59%
4.14%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
3.94%
4.95%
$595
$0 p.a.
95%
Borrow up to 95% LVR of the value of the property you're buying and pay no application or ongoing fees.
4.04%
3.93%
$0
$0 p.a.
80%
Fix your rate for 1 year and make interest-only payments.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
3.89%
4.24%
$0
$0 p.a.
80%
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.89%
3.94%
$0
$0 p.a.
80%
Pay no application or ongoing fee and borrow up to 80% LVR.
3.74%
4.01%
$395
$0 p.a.
80%
A competitive 3 year fixed rate with no ongoing bank fees.

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Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

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Many Australian lenders keep their cards close to their chest when it comes to helping customers save money on their mortgage. Understanding the market and how home loans function, as well as a few tricks of the trade can help you ensure that you’re managing your mortgage in your favour (and not the lenders).

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Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

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