Home Loans

Reporter: Bryan Seymour

With the United Nations warning of a global recession, it's time to take charge of your mortgage. And we can show you how. The big Australian banks are already hiking up their interest rates and homeowners are feeling the pinch like never before. But you don't have to simply take whatever your lender dishes out; in fact, you can turn the tables on them.

It was time, 1972, when the standard variable mortgage rate was 7% and about to jump higher. 26 years on, it's time. New research shows 80% of Australians who refinance their mortgage reap the benefits.Mother of three, Lyndall Spooner, and her husband, tom, were paying their bank $2,200 per month. The last rate rise added $50. "Definitely noticed it, yeah, especially with three kids and cutting down on things that we don't need" says Lyndall.

Lyndall got on the phone and started shopping around. "I was very surprised that I could negotiate because I didn't actually know you could do that," said Lyndall. You can and you should. Here's why. Research from the mortgage and finance association reveals of those who switch their home loans to a different lender, 70.4% got a lower interest rate. 64.8% got better terms and conditions, 61% experienced better service and almost half got a better fee package.

"I rang around a few of the banks and the mortgage companies, just to see what the best rate they could get and said that I was looking at refinancing my loan and a few of them gave me the standard rate and when I asked them if that was the best possible rate they could do they then told me they could drop it by point seven per cent," said Lyndall. That's a saving of 70 to 80 dollars per month. More than double the increases in bank rates over the last week and well worth the effort.

"With three kids it'd be more groceries in the trolley, it'd be going out a little bit more and probably buying a few of the things we don't buy now," said Lyndall. "I gave my bank the opportunity to give me a lower interest rate, when she came back she did, she offered me... I went from 7.57 down to 7.32, that was still not low enough, I'd already be looking around the 6.9," said homeowner Gill McPhee.

Determined to get her interest charge down to that rate, Gill McPhee hunted out a lender who would give her a rock bottom rate. She did it and didn't even have to pay a penalty charge. "With a new lender, yes there are some up front fees which calculating over the long term it's going to take two years to pay that off, but in the long term I'll be saving probably close to fifty thousand dollars" said Gill McPhee.

Switzer financial services owner, Peter Switzer, says most homeowners are loyal their lenders and they shouldn't be. "There are variable home loans that you can get from companies like one direct and my rate at 7.7 per cent, that's a long way from the 8.67 per cent people are hearing about, even some of the big names like amp, their rates are around the low eights, even got some around the high seven's, so this is the sort of information you find when you go looking, but too many Australians won't go looking and as a consequence, they're overpaying" said Peter Switzer.

"You just need to be motivated like I was, a little bit of motivation, get out there, communicate with the banks and find the lowest rate," Said Gill McPhee "It can save you a lot of money and for the few hours that you might spend on the phone and the time it will definitely take you, you should definitely try because you don't know what you'll actually get," said Lyndall. "Why don't more people negotiate with their bank or shop around?" asked our reporter Bryan Seymour.

"I think it's lack of expertise and knowledge. I think a lot of people don't know even where to start" says Peter Switzer. Well, you can start right here. Go to our website and for more information on how to get the best deal.


Mortgage and Finance Association of Australia




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