Interest rates: How mortgage customers can slash costs

Most mortgage customers have no idea what interest rate they are paying and could be throwing good money down the drain. Here’s what you need to do.

Most mortgage customers have no idea what interest rate they are paying and could be throwing good money down the drain.

Despite rates sitting at historically low levels most borrowers are failing to do a quick check of the deal they are on.

New independent research commissioned by banking savings app Finspo quizzed more than 1100 Australians and alarming results showed 54 per cent of borrowers did not know how much interest they pay on their home loan.

And many aren’t even bothering to ask for a better deal — only 21 per cent have negotiated or switched to a better mortgage rate.

Advertising and media planner Georgie Debenham, 28, and her partner, dentistry student Damon Velakoulis, 28, bought their first property in 2017 — a three-unit complex in Shepparton in Victoria’s north for $300,000.

Georgie Debenham and her partner Damon Velakoulis flexed their muscles with their lender. Picture: David Caird

She says the pair has never reviewed their mortgage until recently.

They found they were paying 3.58 per cent on their investment loan with the Commonwealth Bank and could be saving on their $1300 per month repayments.

“We found out we were definitely paying more than we could be or should be,” Debenham says. “As a result we want to fix that and so we are now talking to a broker to help us find a better loan that’s cheaper to us and suited to us.”

Debenham says it’s been an “eye-opener” that they didn’t pay closer attention to their interest rate until now.

“We kind of thought the loan was managing itself and it’s all fine and ticking along whereas we now realise it’s easy enough to refinance,” she says.

Finspo’s chief executive officer Angus Gilfillan says on average Australians spend about $9500 a year on their banking which includes interest charges and fees.

“People often don’t realise how much they could save and on that $9500 people can save about $4500 based on our data,” he says.

“The first step is knowing what you’re paying and what this research tells us is people don’t know. People tend to know more about how much they pay for milk each week and shop around more for milk than they do on their mortgage.”

Consumer finance expert Lisa Montgomery says mortgage customers should be reviewing their loan annually.

“It might even be as simple as going onto some of the comparison sites and making sure you are comparing apples with apples,” she says.

“It’s a good time to do it now, most people have more time at Christmas and New Year.”

Gilfillan says the Finspo app allows the user to link their banking accounts and then provides details on how much customers can save across their financial products.

Originally published as Interest rates: How mortgage customers can slash costs