The cheeky home loan charges that can sting

BORROWERS are neglecting their biggest household expense – their mortgage – by failing to reassess the fees and charges they are paying.

Most consumers say they often analyse their everyday living expenses, including utility bills, insurance, mobile and broadband plans, but they are not bothering to check up on their home loan costs.

New independent research commissioned by online mortgage platform Lendi found 78 per centof people do check BE ups on their everyday expenses, but 54 per cent don’t bother doing the same for their home loan.

Lendi’s managing director,

David

Hyman, said customers can easily be getting price gouged by their lender if they fail to do regular checks, particularly after many banks hiked variable rates. “We see owner-occupier customers coming through on rates in the 5 per cent range today – it’s insane,” he said. “The lowest rate available is about 3.65 per cent, but there are lots of customers on old rates.”

Lendi calculations show that borrowers with a $300,000, 30-year loan could save $4524 a year by switching to the lowest rate.

This is based on them being owner-occupiers, paying principal and interest and being charged a rate of 3.65 per cent.

Some rates are as high as 5.74 per cent.

Three of the big four banks – all except National Australia Bank – pushed up variable interest rates for owneroccupiers and investors recently, adding hundreds of dollars extra for many mortgage customers.

However, a softening house market and intense competition among banks has put customers in the box seat to nab themselves a cheaper deal.

Customers should check their annual fees and charges and interest rate and compare them with other deals to see if they are paying too much.

The Mortgage and Finance Association of Australia’s chief executive officer, Mike Felton, said being loyal to your lender does not pay off.

“The lenders offer better deals to new customers than the deals they offer to existing customers,” he said.

The research found one in five people occasionally pay their bills late (22 per cent), which can impact their credit scores and limit their ability to get credit.

Positive credit reporting was recently introduced in Australia, which means information about a customer – including how many credit accounts are held, what accounts have been opened and closed, the date default notices were paid and whether repayments were met – will be scrutinised.

This will help those with few blemishes on their credit files get better credit deals.