Four in five home borrowers make $87,000 mistake
There is an easy way to potentially save thousands on your home loan, but surprisingly, most Aussies ignore it. Four in five borrowers take out a home loan with a Big 4 bank, instead of shopping around for cheaper loan. This mistake is costing us big time.
Research from Mozo reveals that the difference between the average home loan rate from the big banks and online lenders is a whopping $87,522 on a $400,000 home loan over 30 years. Why the difference? Well for starters, online lenders have lower costs than bricks and mortar banks so they can pass these savings onto borrowers in the form of lower interest rates and fees.
Right now, you can compare online and challenger lenders on Mozo with rates starting from below 2.00%. So, if you'd like to compare and see if you can save, read on for our run down on five of the top online and rival lender home loans on the market right now.
Bank Beating Home Loans: June 2021
loans.com.au - Smart Booster Home Loan
- 1.85% discounted variable rate for 2 years
- Rolls over to low ongoing 2.25% (2.21% comparison rate*)
- Optional offset account plus free redraws and extra repayments
Our verdict:
This attention grabbing home loan from popular online lender loans.com.au is designed to help you boost your savings, build your equity and own your own home sooner. With flexibility at its core, it features unlimited free extra repayments and redraw, multiple loan split options and an optional offset account for 0.10%. Plus, there are no ongoing monthly or annual fees. Available to borrowers with a 30% deposit for loans of up to $1 million.
Where do I get it? Head over to loans.com.au to find out more >>
Bank of Queensland - Discount Fixed Rate
- 1.89% 2 year fixed rate (3.05% comparison rate*)
- Bonus $3,000 cashback for refinancers - Apply by 27 June
- Mozo Experts Choice Best Fixed Rate Home Loan 2021
Our verdict
BOQ is a favourite with borrowers looking to find value outside of the big four banks, and for good reason. The BOQ Discounted Fixed Home Loan lets you lock in a super low rate for two years while still having the flexibility to pay down your mortgage faster with free extra repayments of up to $5,000 a year. Plus, refinancers who apply before 27 June can score a bonus $3,000 cashback. Minimum loan size $250,000, 80% LVR or less.
UBank - UHomeLoan
- 1.75% fixed rate for 1 year (2.31% comparison rate*) – Apply by 30 June
- Free extra repayments up to $20,000 p.a.
- Zero ongoing fees
Our verdict:
Fixed rates don’t get much lower than UBank’s new 1-year fixed rate. Owner-occupier borrowers will be able to grab this limited time only rate on loans between $100,000 and $2,000,000 and while there is an initial $395 application fee to consider, there are no other fees to worry about. UBank even lets customers make extra repayments towards the loan of up to $20k per year, for free!
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Want to compare more home loans? View the latest mortgage rates from over 80 lenders at Mozo's home loan comparison hub.
Editor's note: Savings calculated on average big 4 bank variable home loan rate of 3.53% vs average 2.40% variable rate from online lenders. $400,000 home loan over 30 years, 80% LVR.
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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