Aussies are now paying up to 3x their original home price in loans
With mortgage rates now as high as 8.9 per cent with some lenders, an Australian home owner may end up paying $1.7 million on a $600,000 loan.
New research from finance platform MNY has revealed Australians are now paying up to 2.8 times the amount of their original loan as interest rates and admin fees soar.
“There have been 13 interest rate rises in the past two years, which puts an enormous strain on mortgage holders. There is no guarantee when that will stop,” said MNY business analyst Sabina Khanusiak.
The report analysed 23 Australian lenders, including the big four banks, and found wide discrepancies in rates and additional fees.
Between the cheapest and most expensive lenders was a 2.95 per cent discrepancy rate, equal to $1,148 per month.
The most expensive home loan was held by Commonwealth Bank, with an 8.94 comparison rate once fees were included. The cheapest rate – and the only rate under 6 per cent – was held by Qudos Bank, with a 5.99 base rate and no additional fees.
“Buying a home is the biggest financial commitment most people will make and the interest rates and associated fees can make all the difference to how much mortgage holders will ultimately repay and whether those repayments are sustainable over the life of the loan,” said Khanusiak.
Additional features varied widely from lender to lender, with few consistencies across the board.
Just 56 per cent of lenders offered an offset facility that would allow home owners to reduce their interest payments. Meanwhile, less than one in three lenders allowed borrowers to pause loan repayments in the case of financial hardship.
Maximum loan-to-value ratio (LVR) also differed widely between lenders, with Qudos Bank requiring at least 80 per cent LVR from all lenders, and others requiring just 95 per cent LVR.
“Navigating home loan products and understanding the disadvantages and benefits of each can be daunting, but it is both the effort in the long term. It could mean the difference between repaying your loan three times over, or twice,” said Khanusiak.
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