How I saved nearly $400 per month on my mortgage
Savvy borrowers are eager to refinance their home loan in the new year but many are picky about who they seek help from.
Mortgage interest rates are continuing to tumble and some deals now have a "1" in front, putting customers in the prime position to snap up a cheaper offer and save.
From January 1, mortgage brokers have had a statutory obligation to act in the best interests of consumers - this means they must prioritise consumers' interests when helping apply for credit.
But new independent research conducted on behalf of Mortgage Choice quizzed about 1000 Australians - including first home buyers and existing borrowers - and found:
• 38 per cent are in the process of refinancing or are considering switching to a new loan.
• 53 per cent are reluctant to speak to a bank for refinancing because they are concerned they won't be told there are better deals elsewhere.
• 94 per cent say they trust a mortgage broker's suggestions.
Roxanne Cavalieri, 50, from Newport on Sydney's northern beaches, recently refinanced the $780,000 loan on her three-bedroom home after learning from friends and colleagues she was paying too much.
She only purchased her property 12 months ago and was paying a variable rate 2.8 per cent with Macquarie Bank.
She has switched to a four-year fixed rate loan with St. George Bank and is paying 1.89 per cent and receives $4000 cash back.
This has reduced her repayments from $3250 to $2854 a month, or a saving of $396 per month.
"Talking to friends I started to hear about banks giving better interest rates than we've ever been used to before, that's when this came to my attention," Cavalieri says.
"For me being a single person with a sizeable mortgage, it was a good saving."
Mortgage Choice broker James Algar says refinancing from start to finish typically takes "about four to six weeks".
"It's a good New Year's resolution to refinance, rates have never been so low," he says.
"This is the real prime time before the market really kicks on towards the end of the month, now is the good time to get hold of a broker and have a discussion before getting buried back in life again."
But Algar says that for those a bit reluctant to go through the refinancing process, "brokers take out the heavy lifting".
"Most brokers will complete all of the forms with you rather than just giving you a bunch of paperwork," he says.
"They'll work with you to understand your budget in a bit more detail."
Borrowers are also being urged to review their loans at least annually to ensure they don't get stuck on high rates.
Tribeca Financial's chief executive officer Ryan Watson says banks can, "implement interest rate creep".
"Over two to three years interest rates become uncompetitive and cost the client a lot more than they should," he says.
"One of the easiest ways to save thousands of dollars is refinancing your mortgage.
"A quality mortgage broker will be able to do this for you without you spending any more than two hours of your time."
• Do online comparisons of other deals available.
• Speak to your existing lender to ask for a better rate.
• Engage a mortgage broker to help you find the best product and make sure you have not overlooked features or benefits such as special discounts, fixed rate portions, offset accounts or cash back offers.
• Crunch the numbers to work out potential savings.
• Understand the costs involved to switch plus ongoing fees after the move.
Originally published as How I saved nearly $400 per month on my mortgage