One thing that has Aussies stressed
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-to-value 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.
“The rise in interest rates may be hitting homeowners hard, but there are ways to ease the burden, and that starts with understanding your loan.”
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.
“Borrowers should also check the less obvious but very impactful changes they can make, like increasing how often they pay.
“That could save them over 1000,000 in interest over a 25-year loan term.”
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 for Australian mortgage holders looking to save according to the report included looking outside the big four banks as well as banking with an offset account.
Mozo further encouraged mortgage holders to consider a split rate home loan to “hedge their bets” against RBA cash rate moves and to use their home to generate income.
