An annual home loan health check can help you save money every year

Home loan customers are saving themselves about $1600 per year by refinancing to a much more competitive deal. This is what you need to do to save.

Mortgage customers are saving themselves on average about $1600 annually by refinancing to a better deal, new statistics from broking firm Aussie show.

The analysis found the average loan size of 11,300 Aussie customers who refinanced in the last two years was $346,300.

Customers saved about $134 each month and got an average rate drop of 0.66 percentage points.

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Aussie chief executive officer James Symond urged borrowers to review their loan and ensure they were getting a competitive deal.

“Complacency is the killer. My top tip is to keep on top of your home loan and review it each year,” he said.

“Despite the tighter credit conditions, it is still possible to get a better deal on your home loan through refinancing, however the process can be time consuming and involve producing more records on your financial position.”

The Reserve Bank of Australia kept the cash rate on hold at 1.5 per cent this month but there is growing speculation of a rate cut in 2019 after a recent slowdown in economic growth.

Owner occupiers with a loan-to-value ratio less than 80 per cent should be hunting for an interest rate starting with a “3”.

Justine Gatt and her partner Buddy Isbister, both 29, recently refinanced and slashed their rate almost in half on the three-bedroom home they purchased in 2015.

Justine Gatt, 29, with partner Buddy Isbister with their two children Levi, 3, and Saydi, 3 months, live in a three-bedroom home in Brookfield near Melton in Victoria and recently refinanced their mortgage to save.

Ms Gatt said they were on a ridiculously high rate of 7.61 per cent and refinanced to just 3.81 per cent on their loan of around $300,000.

“We rolled some credit card and a personal loan debt into our home loan and started fresh,” she said.

“We feel like now we have our mortgage under control and we can afford things now instead of putting it into our loans.”

A new analysis by realestate.com.au found that 67 per cent of people who had used a mortgage broker said they would use one again in the future.

Realestate.com.au’s general manager of financial experiences, Eloise Wall, said a broker could “help you navigate the paperwork and match you the best products to meet your needs”.

“For a consumer that can be harder to do on your own,” she said.

@sophieelsworth

How to refinance your mortgage

• Check your loan’s fees and interest rate.

• Compare lenders using online comparison websites.

• Ask your lender to do a better deal.

• Engage a mortgage broker if you need assistance.

• Get the lender or broker to work out the savings you could make if you switch.

• If there’s a better deal, get your new lender to help you switch.

Originally published as An annual home loan health check can help you save money every year