Lazy borrowers hit by exorbitant home loan interest rates

LAZY home loan customers are paying hundreds of thousands of dollars extra in interest. And it’s all because they’re failing to make one simple phone call.

IT’S the fattest lazy tax that is costing some home loan customers hundreds of thousands of dollars because they are failing to make one phone call to their bank.

Naive owner-occupiers are being gouged by exorbitant home loan rates above 5 per cent — adding ridiculous amounts in extra interest repayments over their loan term by failing to barter for a better rate.

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Banking sources confirmed to News Corp many ideal borrowers — owner-occupiers paying principal and interest with a loan-to-value less than 80 per cent — continue to get charged unnecessarily high variable rates.

Home loan customers should hunt down more competitive interest rates with a “3” in front.

Examples include one borrower with a $660,000 home loan who has been with their lender for six years and is paying a high rate of 5.05 per cent.

If they switched to the lowest rate on the market at 3.49 per cent they could save themselves more than $217,000 in interest charges.

Another financial institution revealed they have many ideal borrowers paying above five per cent — and consequently the banks have done nothing to encourage these borrowers to seek out a better deals.

Home Loan Experts’ managing director Otto Dargan said he often sees customers on deals that is costing them big.

Home Loan Experts managing director Otto Dargan says they have many customers who are paying excessive amounts in interest.

“We’re seeing a lot of customers who had a competitive rate a few years ago and now they’re on a rate over 5 per cent which is just crazy,’’ he said.

“When a fixed rate expires the banks often put borrowers on a variable rate that isn’t competitive, they are very good at finding ways to put up rates.”

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Financial comparison website Mozo’s database shows the lowest variable rate for the ideal borrower is 3.49 per cent and monthly repayments are $2960.

The average variable rate is 4.36 per cent and monthly repayments are $1495.

Home loan customers who fail to review their deals are often on old rates and are paying much more than what is offered to new customers.

The site’s spokeswoman Kirsty Lamont said customers “should push your lender, if you don’t get anywhere the first time try again,’’ she said.

“Often lenders reserve their best rates for customers who push the hardest.”

Mortgage Choice chief executive officer John Flavell warned: “Borrowers should avoid a set and forget mentality to their home loan and review their rate every 12 months.”

“If their current interest rate starts with a 4 or higher they should review it now as they could end up saving thousands over the life of their loan.”

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