We Aussies are a laid back lot: No worries mate, she'll be right, no dramas.
It's a good mindset for most situations, but when it comes to mortgages for property owners and investors, this relaxed attitude is costing millions of us big bickies.
The big four banks continually charge higher home loan rates than their smaller competitors, yet they still control about four-fifths of Australia's mortgage market.
Switching has become much easier thanks to rule changes in recent years, and there is evidence that more borrowers are refinancing, but the vast majority of us still stick with the same lender for years sometimes forever.
It may be lack of interest, lack of time, lack of will, lack of knowledge, or even complete confusion. An Ernst & Young report released this week found one third of people who search for information about mortgages give up citing "choice overload''.
I suspect for most of us it simply seems too hard. Changing lenders often means changing all your direct debits, credit cards, mountains of forms to sign, the list goes on. For a few hundred bucks a year in savings it doesn't seem worth it, especially when the new lender may later lift its rates anyway.
However, many people who crunch the numbers and switch lenders often find they save much more than a few hundred bucks. Cheaper online lenders such as UBank which is owned by NAB and loans.com.au are offering rates more than 1 percentage point below the big four. On a $300,000 mortgage over 30 years, that's a total interest saving of $70,000.
I'm not going to sit here at my fancy keyboard a tell you to switch lenders. But there are some simpler steps to take to make sure you're not paying more than you need to.
First, talk to your existing lender and bargain for a better deal. Many offer professional packages that cost a few hundred bucks a year but provide discounts on interest and fees that can save you thousands.
If you're not happy, don't be afraid to speak with other lenders. And walk if necessary.
The bank account switching hassle was made easier last July with new "tick and flick'' laws that enable a customer's new bank or to move across all the credits and debits on their behalf.
Reproduced in part with permission: The News Limited Network, How to change your lender and save big bucks,13 October 2012
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