The Australian Securities and Investments Commission (ASIC) has issued advice on how to get the best deal on home loans in this low-interest environment.
Senior Executive Leader Consumer Insights and Communication at ASIC, Laura Higgins joined ABC Melbourne Drive host, Raf Epstein to discuss how to make the most of a mortgage and things to consider when refinancing.
Ms Higgins said that in the past year many people had already looked to see if they could get a better deal.
“Whether due to changed financial circumstances or suddenly having more time to review their options, ASIC’s mortgage calculator had record usage in 2020,” Ms Higgins said.
“In Melbourne, 320,000 people used the mortgage calculator in 2020, an increase of 75 per cent from the previous year.”
She said this supported data from the Australian Bureau of Statistics which showed that in the past year refinancing hit a record high.
“When considering refinancing, the first thing you should do is ask your current lender for a better deal,” Ms Higgins said.
“Many times, new customers are offered a better deal than existing borrowers, so if you haven’t, and you have a home loan that is a few years old, you could potentially get a better deal that saves you thousands of dollars over time.”
She said that if you have at least 20 per cent equity in your home, you’ll have more to bargain with and having a good credit score would also help with negotiations.
Ms Higgins said even if you were happy with your current lender, it was worth checking you were not paying for unwanted features or add-ons.
“If you decide to switch lenders, you may end up with a longer term loan,” Ms Higgins said.
“Also, consider whether lenders mortgage insurance or other costs like discharge and loan arrangement fees may be payable — these additional costs can outweigh the benefit of a lower interest rate.”
