Julian Finch, principal broker at Finch Financial Services, believes too many homeowners are missing out on better deals due to fears over costs and difficulty in refinancing their loans.
Finch says that many people place their home loans in the 'too hard' basket, possibly at a high financial cost.
Loyalty doesn’t pay
One of the common mistakes homeowners make is staying with a bank long-term, especially the major banks.
"Unfortunately, most people with home loans with the big four just automatically assume that they are on the best interest rate the financial institution has to offer," Finch said.
He suggests a diligent search for better rates could potentially save homeowners 1% on their loans—a figure that translates to an annual A$8,000 on an A$800,000 mortgage.
While many mortgage holders balk at the idea of refinancing, initial costs are typically recouped within months, providing financial benefit over the long-term.
Given there are currently more than 6,000 mortgage products on the market, it pays to shop around.
"It doesn't make sense to be tied down with paying more than you should have to,” Finch asserted.
Specialised mortgages
Beyond public advertising, an entirely separate world of specialised mortgages is available through financial brokers.
These loans, according to Finch, are "offered by some of the world's largest financial institutions", providing not only competitive rates but also the flexibility to tailor features to consumer needs.
Refinancing this way often offers better adaptability as well, potentially shortening loan terms and enhancing equity.
"As we go through life, our lifestyles keep changing," he said, “The situation you were in ten years ago would most likely vastly differ from what your life circumstances are right now.
“Back then the thought of paying off a loan in 15 years might not have been imaginable, but through children growing up and job opportunities, you might be able to afford a shorter loan term now.”
Consolidating debt
If you have multiple loans, refinancing can make repaying them cheaper, easier and quicker.
"Consolidating your debts can put you on the fast track of paying it off,” Finch explained.
“Even though you might think you're paying more each month because you're combining all your debts into one payment, you'll be saving on the interest costs of various loans.
“This could actually work in your favour by lowering the rates of each individual loan you have. So you'll pay off your debts faster.”
Finch recommends finding an expert team you can trust that will offer flexible, tailored financial solutions.
“Everybody has their own unique set of goals, challenges and dreams, so why should the solutions all be the same? Look more broadly than the big four,” he said.