“The most expensive mistake a borrower could make is sticking with the same lender over a 25 to 30 year period.”
According to Mozo research those with a $500,000 mortgage could save up to $70,000 over a 25 year period just by switching from the average rate home loan to one of the lowest rates currently available.
“Refinancing to a new home loan only takes a few hours and the savings that can be made are significant - it could be the easiest $2,800 you make this year.”
Here are Lamont’s three top tips for switching like a pro:
1. Compare your rate with the best on market “The average rate is currently 0.85% higher than the lowest rate in our database. Some people might not think it’s worth switching for such a small rate difference, but it can add up to thousands of extra dollars each year in your pocket.”
To research the best value home loans, Lamont recommends using an online comparison tool, as you’ll avoid wasted hours spent visiting each lender’ website.
2. See if you’re up for any switching costs Once you’ve compared the best rates to find out how much you can save by switching, Lamont says the next step is to work out any costs involved in refinancing.
“You might be charged a discharge fee from your current lender or an upfront fee by the provider you’re switching to. In most cases however, the savings to be made by switching will outweigh any refinancing costs.”
3. Choose a loan with flexible features Lamont’s last piece of advice is to create a shortlist of the types of features you would like in your new loan.
“Features like an extra repayments facility and offset account can help you to pay down your home loan faster and save even more on interest charges,” adds Lamont.
Want to avoid this mortgage mistake and see if you can save thousands on your home loan? Head to Mozo’s home loan comparison hub which covers more than 550 home loans from banks, non-bank lenders, credit unions and building societies.
Note - savings calculation based on switching to a 3.89% variable rate home loan.
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