Hurdles to change of lender can be in mind

MOVING a mortgage to a new lender appears to produce plenty of hurdles, although many of them are imagined.

Finance specialists say the barriers to switching today are mostly mental because technology changes and eager-to-help lenders have made the process easier than in the past.

People’s Choice Credit Union spokesman Stuart Symons said research had found that more than one-third of people did not switch loans or bank accounts because they thought the process was too hard, with many saying it wasn’t worth the effort.

“But in reality, there may be a surprisingly small amount of paperwork required,” he said.

“Financial institutions now do so much more online and are trying to make things as easy as possible, and mobile lenders make it even easier.”

Mr Symons said a typical borrower who refinanced a $350,000 mortgage from 4.5 per cent to 3.8 per cent could save $2000 a year over five years. “Some financial institutions may even offer you rebates if you switch.”

Mortgage Choice spokeswoman Jessica Darnbrough said people who thought it was too much trouble to switch would never know how much they could save unless they did some research or spoke with a broker.

“There are costs associated with refinancing, but if it’s a much sharper product the savings can significantly outweigh the costs,” she said.

Age was a perceived hurdle for some people, Ms Darnbrough said. People in their 40s or 50s might be put off switching because they didn’t want another 30-year mortgage, she said, but shorter loans were available.

People’s Choice’s Mr Symons said some customers believed all financial institutions were the same.

“That is most definitely not true,” he said. “Alternatives such as credit unions, mutual banks and building societies are customer-owned so they don’t need to trade off customer service for shareholder profits.

“A quick search of the internet will show you there really are lots of options.”