New research estimates Australians are wasting more than A$4 billion each year paying unnecessary interest on their mortgages, because they’re sticking with their original home loan and not switching to a better offer. They’re also spending more than they need on other common household expenses – money that otherwise could be used to help them pay off a mortgage sooner.

The Household Financial Waste Report, released in July 2019 by mortgage-broking service uno Home Loans, highlights key areas where householders can cut back their spending to free up funds for additional mortgage repayments.

It reveals Australians spend more than A$1 billion each year in powering appliances that are in standby mode, while annually more than A$9 billion worth of uneaten food ends up in the garbage.

Is the interest rate too high?

Paying too high an interest rate, however, is a particular drain on Australians’ finances. As well as the A$4 billion excess interest on home loans, householders are also coughing up too much for other financial products.

Australians pay A$621 million in extra interest by not switching from high- to low-interest credit cards, and A$551 million in fees for late or overdrawn cards.

But the problem of paying onerous interest rates has a quick fix. All it requires is some research and a decision to switch.

In the current low interest climate, any existing home loan should be scrutinised. uno Home Loans has designed a new service to help mortgage holders called Active Home Loan Management, with a unique tool called loanScore™ to help individuals understand the health of their home loan.

Many accountants and financial advisers are finding the tools useful as part of their clients’ annual financial health check.

“It’s a value-added service accountants are using to help clients understand if they can save money on what is often their biggest outgoing, their home loan,” says uno Home Loans CEO Anthony Justice.

Pictured: uno Home Loans CEO Anthony Justice.

A tool to find a better home loan

Active Home Loan Management is a simple three-stage process that homeowners can use to assess if they are paying too much for their home loan.

First, they go to the uno Home Loans’ website to analyse their home loan. They answer questions about the current interest rate, how much they owe, their current repayments, salary and where they live. Within two minutes, a loanScore out of 100 is generated, indicating the health of the existing home loan.

loanScore also lets homeowners know how much they could save over three years if they refinance with another lender or renegotiate with their current lender, taking into account any costs associated with switching loans. uno Home Loans has a panel of 29 lenders, including Australia’s big four banks.

“Once you’ve calculated your loanScore, we’ll update you every month,” says Justice. “Over time, your loanScore changes because lenders bring out new products and, if the equity in your property rises, you could get access to better rates than when you took out your loan.”

“If the equity in your property rises, you could get access to better rates than when you took out your loan.”

Active Home Loan Management also allows homeowners to nominate a potential savings threshold at which to receive an alert. For instance, mortgagees may only choose to be notified if they can potentially save more than A$5000 over the next three years.

“We’ll email you as soon as we find a deal that matches the threshold you have set,” Justice explains. “Then, we’re happy to help you renegotiate with your existing lender or refinance through a new lender. We have a team of fully qualified brokers here to help.”

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To find out more, calculate a loanScore or download a copy of uno’s Household Financial Waste Report, go to unohomeloans.com.au/ca