It is no secret that things are getting are tough financially. The cost of living is on the rise with no end in sight and everyday Australian’s are increasingly finding themselves needing to reassess outgoing expenses and shop for better deals to keep the cost of living down.
ME Bank recently performed a survey questioning participants about their spending and attitude towards saving and finances. Not surprisingly, the results showed a whopping 90% of individuals were savvy with their finances in their everyday life – looking for discounts at the supermarket, changing phone plans to save money, rethinking luxury purchases in favour of more financially conservative options. The survey also uncovered an alarming trend in average Australian’s budgeting habits… they are not reassessing their home loans periodically or at all.
According to ME, the survey found that 84% of people spend a considerable amount of time looking for the best deal on electronics, 81% on holidays (flights and hotels), 68% on phone contracts and 64% on comparing insurances, however only 44% periodically reviewed their home-loans.
The head of home loans at ME Bank Patrick Nolan comments that this trend is not surprising, saying that when it comes to mortgages, Australian’s are “price takers, not price makers”. He says that Australian’s are more inclined to stick with a home-loan from a bank that they regularly use as they believe it will be the best deal for them. He also attributes the low number of people reviewing their home loans to a level of naivety, with people simply trusting they are getting the best rate possible. Nolan comments that “74% of borrowers assume they are on a good rate, but that unlikely if over 80% of borrowers are with a major bank, which tend to be more expensive”.
Nolan believes that many average Australians do not feel they have the power or the ability to negotiate their home-loans or get confused by the product names and fine print so they accept the first offer they are given.
Reviewing your home-loan is vital when overhauling family spending. Patrick Nolan says that a simple refinance can save over $1560 per year ($46,000) on an average loan of $400,000. The “set and forget” mentality that many Australian families fall into could be costing them thousands of dollars. Whilst reviewing your mortgage isn’t a simple task it is just as important as reviewing your other household spendings, which is why is always a great idea to speak to a experienced mortgage broker to help you get the best deal and keep your hard earned dollars in your pocket!
For more information on refinancing your home loan contact Solid Investment Property on (03)9690 2666