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

Rates and fees last updated on

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. 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, or $1,848 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 October 19th, 2017
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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
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.65%
3.66%
$0
$0 p.a.
90%
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.64%
3.66%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.49%
4.47%
$0
$375 p.a.
90%
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.54%
3.54%
$440
$0 p.a.
80%
Borrow up to 80% LVR with no ongoing fees and a 100% offset account.
3.88%
4.89%
$0
$395 p.a.
95%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.65%
4.84%
$0
$395 p.a.
90%
A 2 years fixed platinum package that has $0 application and a loan redraw facility.
3.74%
3.74%
$0
$0 p.a.
80%
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.69%
3.72%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
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.
3.72%
3.74%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.73%
3.73%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.86%
3.87%
$0
$0 p.a.
80%
Pay no ongoing fees on a competitive variable rate home loan.
3.99%
4.02%
$600
$0 p.a.
90%
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
3.84%
3.84%
$0
$0 p.a.
110%
Requires a family member to act as guarantor. Discounted rate available with family pledge loans. Family pledge loans require no LMI and no deposit. NSW, Qld and ACT only.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.64%
3.64%
$0
$0 p.a.
70%
A basic low-rate home loan that still offers some useful features.
3.77%
3.81%
$200
$0 p.a.
95%
A basic home loan with a low interest rate and a redraw facility available.
3.65%
4.10%
$500
$0 p.a.
95%
Get a discounted fixed interest rate for the first 12 months while you settle into your new loan.
3.74%
3.75%
$0
$0 p.a.
80%
A special variable rate home loan with no application or ongoing fees.
3.74%
4.15%
$0
$395 p.a.
80%
Enjoy a discount of a competitive interest rate and 100% offset account.
3.97%
3.99%
$0
$0 p.a.
90%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.96%
3.98%
$0
$0 p.a.
90%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.74%
3.74%
$0
$0 p.a.
90%
A competitive variable rate with a redraw facility. NSW, QLD and ACT residents only.
3.97%
3.97%
$0
$0 p.a.
80%
A competitive variable rate home loan with no ongoing fees.
3.84%
4.83%
$0
$0 p.a.
95%
Get a competitive 2-year fixed rate with no application or ongoing fees.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
3.64%
4.03%
$0
$395 p.a.
95%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
4.09%
4.12%
$0
$0 p.a.
80%
Access the equity in your home with a competitive interest-only rate and no application fee.
3.99%
4.02%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
3.69%
4.45%
$0
$375 p.a.
90%
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.83%
3.83%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.89%
3.91%
$0
$0 p.a.
80%
Package your owner-occupied loan with your investment loan and enjoy low rates for both.
3.79%
3.92%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
4.19%
4.19%
$0
$0 p.a.
90%
100% offset account, unrestricted additional repayments and no monthly account keeping fees
3.69%
4.00%
$0
$350 p.a.
95%
Fix your rate for 3 years and borrow up to 95% LVR.
3.99%
4.77%
$0
$0 p.a.
95%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.94%
4.88%
$0
$0 p.a.
95%
Enjoy a low interest rate and borrow up to 95% (with LMI) of your property's value.
4.33%
4.33%
$363
$0 p.a.
70%
A variable home loan with $0 annual or monthly fees.
3.80%
3.81%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
4.03%
4.07%
$0
$0 p.a.
95%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.88%
4.47%
$0
$0 p.a.
95%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$600
$0 p.a.
90%
Get a low variable rate along with some important basic features.
3.79%
3.79%
$0
$0 p.a.
80%
Minimum loan amount for this basic home loan is $750001.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.69%
4.03%
$0
$299 p.a.
80%
Enjoy a low variable rate with no application fee.
3.99%
4.99%
$0
$395 p.a.
95%
A package home loan with fee free extra repayments available during the fixed term.
3.85%
4.95%
$0
$395 p.a.
95%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.88%
4.88%
$0
$395 p.a.
95%
Lock in a discounted fixed rate with a low service fee.

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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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