Home loans have us living on the edge

Three-quarters of Australian home loan holders are worried about their mortgage repayments in the face of multiple “aggressive” rate hikes, a new report has revealed.

The findings, by finance research institute Mozo, paint a bleak picture for families struggling to make ends meet, with many unaware of key details of their loan.

According to the report, more than half of mortgage holders do not know their interest rate, the type of home loan, or what their loan-tovalue ratio is.

Worse still, Mozo personal finance expert Rachel Wastell said a whopping two in five mortgage holders, or 42 per cent, did not know their home loan interest rate.

“Buying a home is one of the biggest investments you’re likely to make, but after so many rate hikes, Aussies are finding it difficult to stay on top of the changes,” she said.

“Australians are essentially pouring thousands down the drain by not knowing their home loan rates. It’s like driving with your eyes closed.”

Ms Wastell said mortgage holders could save as much as $100,000 just by checking key details of their loan, including what other interest rates might be available.

“A home loan is decades of debt, and interest on loans is calculated daily, so even the smallest difference in rates can save you hundreds of dollars a month,” she said.

The report found someone with a $500,000 loan over 25 years at a rate of 6.82 per cent could save $111,000 over the life of the loan by switching to fortnightly payments.

Other options include looking outside the big four banks and using an offset account.