Shop Around For Mortgage To Save Thousands
Sun Herald
Sunday November 24, 2002
HOME loan competition has never been hotter.
While the Reserve Bank ums and ahs about whether to cut rates next year, the banks are already at it. It's just that they don't want to look easy prey or spoil an existing lucrative deal.
Borrowers have long complained that new clients of lenders often get offered better deals especially a honeymoon rate. They shouldn't get too uppity though honeymoon rates are, for the most part, a con.
The savings in the first year are pretty tiny looked at over the life of the loan.
As mortgage brokers become more popular, especially with Aussie Home Loans jumping ship to become one of them, lenders are taking advantage of them to fine-tune their rates.
St George Bank is offering the unusual combination of a fixed-term rate with a honeymoon. It's combining its 4.99 per cent one-year honeymoon with the two-year 5.99pc rate, itself cut from 6.29pc. That's 5.49pc for two years the equivalent of more than four Reserve Bank rate cuts.
The other advantage of mortgage brokers who get paid commission by the lender for signing you up is that you can get them to haggle on your behalf.
Lenders expect this. One bank has told brokers it will entertain a 0.5pc discount on line of credits.
The disadvantage of brokers is that they don't have every lender on their books.
Two of the bigger non-bank lenders after Aussie Home Loans, Wizard and Resi Mortgage, refuse to use mortgage brokers. They claim the commission they would have to pay would make their loans more expensive.
And it would be hard to beat Resi's 5.85pc. This is just like a full bells and whistles bank loan only 0.72pc cheaper and without the monthly fees.
Wizard is opening its 150 branches today for those wanting to refinance.
``Independent research shows that more than 70pc of Australian consumers do not even know what their interest rate is that's a lot of people who are probably paying way too much," said executive chairman Mark Bouris.
Just cutting the rate from 6.57pc to 6.22pc on a $250,000 30-year loan would
save more than $20,000 in interest.
WHAT YOU WOULD PAY IF RATES MOVE Loan - 0.5% - 0.25% 6.57% + 0.25% + 0.5% $150,000 $973 $996 $1,019 $1,043 $1,067 $200,000 $1,297 $1,328 $1,359 $1,391 $1,423 $250,000 $1,621 $1,660 $1,699 $1,738 $1,778 $300,000 $1,946 $1,992 $2,039 $2,086 $2,134 Monthly repayments on a 25-year mortgage. Curent rate is 6.57pc.
© 2002 Sun Herald