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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 AmountInterestRepayment TermMonthly repayments
$ 500,0005.50%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 AmountInterestRepayment TermMonthly repayments
$ 500,0005.0%30 years$ 2,684.11

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

Mortgage AmountInterestSavings
$ 500,0005.0% $ 154.84 per month
$ 500,0005.0% $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 June 24th, 2018
$
Loan purpose
Offset account
Loan 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
3.69%
3.69%
$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. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more (new or refinance). Terms and conditions apply.
3.64%
3.66%
$0
$0 p.a.
80%
Pay no ongoing fees and enjoy a flexible repayment schedule, including the ability to make unlimited additional repayments without penalty.
3.69%
3.69%
$0
$0 p.a.
70%
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.69%
4.11%
$0
$395 p.a.
80%
Save on interest with a 100% offset account and save on other ME products with this package loan.
3.49%
4.49%
$0
$395 p.a.
90%
Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.
3.52%
3.53%
$0
$0 p.a.
80%
Go from application to approval in as little as 20 minutes with a variable rate loan from this innovative online lender. Add a 100% offset account for $10 a month.
3.89%
4.88%
$0
$395 p.a.
95%
Low deposit package loan with a range of discounts. Earn up to 500,000 Velocity Points to spend on flights, hotels and more.
3.73%
3.76%
$0
$0 p.a.
80%
This basic loan offers discounts for higher borrowing amounts and carries no ongoing fees.
3.64%
3.67%
$0
$0 p.a.
80%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments.
3.69%
3.94%
$0
$248 p.a.
70%
Get a sharp rate and a 100% offset account. Borrowers must have a 30% deposit.
3.64%
3.67%
$0
$0 p.a.
80%
A mortgage with a competitive variable rate, limited fees and plenty of flexibility.
3.54%
3.58%
$0
$0 p.a.
80%
Eligible borrowers can get $900 cashback on this loan with a 100% offset account and a redraw facility.
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.
3.64%
3.69%
$600
$0 p.a.
80%
A competitive variable rate for borrowers with a 20% deposit or more. Guarantor option available.
3.65%
3.66%
$0
$0 p.a.
80%
This special rate mortgage has no ongoing fees and offers flexible repayments. Save $595 in establishment fees before 30 June.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Get a 100% offset account to save on interest charges, and pay no application fee.
3.99%
4.85%
$0
$395 p.a.
95%
Competitive fixed rate package loan. For a limited time you can earn Velocity Points to spend on hotels and flights.
3.69%
3.74%
$600
$0 p.a.
80%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.68%
4.00%
$0
$299 p.a.
80%
Get a 100% offset account and rate discounts for higher borrowing amounts.
3.79%
3.79%
$0
$0 p.a.
80%
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan.
3.74%
3.74%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.62%
3.62%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more. Terms and conditions apply.
3.64%
3.64%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at 70% or below with this innovative online lender.
3.64%
4.03%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.70%
4.13%
$0
$395 p.a.
90%
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.77%
3.81%
$200
$0 p.a.
95%
A simplified mortgage with a low interest rate and a redraw facility.
3.79%
3.83%
$600
$0 p.a.
80%
A low interest rate loan with limited fees and a redraw facility. Principal and interest repayments only.
3.68%
3.69%
$0
$0 p.a.
95%
This variable rate loan offers flexible repayments and a redraw facility. Available with a 5% deposit.
4.19%
3.78%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.73%
3.76%
$0
$0 p.a.
80%
This basic loan offers discounts for higher borrowing amounts and carries no ongoing fees.
4.09%
4.12%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.99%
3.74%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.79%
3.79%
$0
$0 p.a.
80%
Get a 100% offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.68%
4.00%
$0
$299 p.a.
80%
Get a 100% offset account and rate discounts for higher borrowing amounts.
3.79%
3.84%
$600
$0 p.a.
90%
Buy your home with just a 10% deposit, few fees and a reasonable interest rate.
3.89%
3.92%
$0
$0 p.a.
80%
A low-fee line of credit loan from an online lender. Unlock the equity in your home and make interest-only repayments with a competitive rate.
3.94%
3.71%
$0
$0 p.a.
80%
Apply online for this fixed rate, low-fee loan with redraw facilities and an optional offset account.
3.83%
4.49%
$0
$299 p.a.
95%
Owner-occupiers can enjoy a discounted fixed rate, a rate lock feature and the ability to make additional repayments.
3.69%
4.47%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
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.
3.78%
3.78%
$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.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.85%
4.05%
$0
$350 p.a.
95%
This high LVR fixed rate loan allows you to borrow up to 95% of the value of the property you're buying.
4.09%
4.11%
$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%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Points on your mortgage (for a limited time, subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
4.09%
4.12%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and get flexible repayment options and a redraw facility.
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.
3.99%
4.03%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and pay no application or ongoing fees.
3.59%
4.42%
$600
$0 p.a.
95%
Get a 1% discount for the first two years of your loan and pay no application or ongoing fees.
3.68%
3.69%
$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.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.89%
4.97%
$0
$395 p.a.
95%
Get discounts on a range of Commonwealth Bank products and enjoy the option of fee-free extra repayments during the fixed term.
3.89%
4.96%
$0
$395 p.a.
95%
Switch to this loan and can get $1,500 cashback. Conditions apply. Package your home loan with a Qantas rewards earning Amplify credit card.

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Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

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).

Image: Shutterstock

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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