Aussies Losing Thousands On Overpriced Mortgages
Australia’s largest online lender loans.com.au has urged Australians who are purchasing a home in this spring buying season to carefully research their loan options before signing on the bottom line as research shows that many borrowers are paying vastly more than they need to.
Founder Kim Cannon said homebuyers who assumed that all lenders offered broadly similar value were making a big mistake.
“If buying a home is the biggest financial decision you will ever make, choosing a home loan is the second biggest,” Mr Cannon said.
“It deserves the same careful scrutiny as your choice of a home because the wrong decision on an average-sized loan can cost more than $100,000 dollars over the term of the home loan. These are life-changing sums.”
Mr Cannon said that when shopping for a home loan, buyers should avoid distractions and keep their eye firmly on the comparison rate, which combines all costs into a single percentage rate.
“When choosing a home loan the biggest effort should be put into searching online for the lowest comparison rate loan so you can minimise the interest payments you will be making for 30 years,” Mr Cannon said.
“Just as buying property is all about location, location, location, when you take out a loan it is all about comparison rate, comparison rate, comparison rate.”
Mr Cannon said data from comparison site Canstar showed that a homebuyer who borrowed $450,000 could pay more than $114,000 in extra interest over the life of the loan if they made the wrong choice instead of borrowing from loans.com.au (see table below) with its remarkably low interest rate.
Loans.com.au recently cut the variable rate for home purchases on its Essentials product to a record-low 3.39 per cent (comparison rate 3.41 per cent).
Mr Cannon said the radically-low rates aimed to force a shift in how people thought about online lenders like loans.com.au so they became the first port of call instead of walking into a bank branch.
“Our rates are so far below the banks’ rates you have to ask why anyone would even consider borrowing from them instead of coming to us,” Mr Cannon said. “Rates like these are going to save smart homebuyers serious money and drive massive growth in the online market.”
Loans.com.au offers innovative online finance products backed by Firstmac, Australia’s largest non-bank lender, with 35 years’ experience and $8 billion in mortgages under management.