Home owners make the move and save
Figures from the Australian Bureau of Statistics show the number of Australians switching their home loans to other financial institutions has increased by 16% in the past financial year, meaning more home owners are looking for a better deal to save money on their mortgage.
Late last year, we saw the number of refinanced loans almost double when compared to the same period in 2011 and we experienced a 20% increase in the number of people bringing their home loans across from another lender.
We predict the trend towards switching will continue, particularly following the Federal Government’s new legislation on switching financial institutions, which came into effect from 1 July 2012.
The new legislation gives homeowners the ability to change financial institutions without having to go back and forth with their current provider. The new provider now arranges the switch, making it easier for the homeowner.
We will see more and more people looking for alternative products as home loan packages become more competitive, which actually works in the consumers’ favour.
People can save thousands by switching providers, for example, if they can find a home loan product that reduces their interest rate from 6.69% to 6.49% they could save up to $450 a year – based on a standard mortgage of $300,000. This would be a saving of more than $11,000 over the course of a 25 year loan.
We recommend the following to those who are considering a switch:
• Assess – is your current home loan still the best solution for you? Has your lifestyle changed since you first took out the loan and what loan features are most important
• Research – see what other financial institutions are offering and which package meets your needs.
• Compare – Ask for a Home Loan Key Fact Sheet from your existing and potential providers for an easy method of comparing home loans.
• Understand your existing terms – find out whether you will have to pay any exit fees and if so, will this be worth it in the long term.
• Speak to the professionals – after doing your own research, it’s a good idea to talk to your existing and potential provider to get the best possible product.
If you have any questions about home loans or how to switch, feel free to leave a comment on this post.
^Michelle – State Manager, WA