The Canberra Times

Clever Money: How to save $5,333 off your home loan

Clever Money: How to save $5,333 off your home loan
Clever Money: How to save $5,333 off your home loan

This is sponsored content for Together Australia.

Home buyers are increasingly turning to second-tier mortgage lenders to take advantage of lower rates and to avoid the tougher lending criteria of the Big Four.

Smaller banks such as Bendigo, neobanks like 86 400 and lenders such as Well Home Loans are still tightly regulated by government bodies and consumer credit laws, and must be transparent with fees and terms.

However, their smaller sizes and simplified organisational structures mean they have more flexibility with rates and fees, which make them attractive to borrowers with smaller deposits, lower credit scores or less stable employment.

This smaller, simpler structure also makes the application process easier and speeds up turnaround times - with some lenders promising to give you approval in the time it takes to eat your breakfast.

Even more appealing, these second-tier banks tend to have lower overhead costs - especially due to smaller or no physical branches. And that means lower rates.

They were also faster to drop their interest rates in line with the Reserve Bank's slashed interest rate, although the Big Four have since followed their lead.

We ran a hypothetical mortgage for an owner-occupier property, with a loan amount of $600,000 with a principal and interest repayment over 30 years through Finder's comparison service.

Unsurprisingly, 18 of the 20 best advertised rates on the July 2020 mortgage comparison were from second-tier lenders.

The Commonwealth Bank offers such a loan at 3.02 per cent. The cheapest second tier lender's loan is 2.22 per cent. That's a saving of a whopping $159,995 in interest over the term of the loan, or $5,333 a year.

Two more tips for those seeking home loans: the slow-down in home purchases makes it more likely rate negotiations will be in your favour. And a few banks have changed their loan-to-value ratios. Some lenders are concerned about price falls and asking for higher deposits.

Will Scott Morrison rescue Australia's young workers?

Clever Money: How to save $5,333 off your home loan
Clever Money: How to save $5,333 off your home loan

Younger workers, particularly millennials, are some of the hardest hit by the pandemic.

Prime Minister Scott Morrison has announced changes to JobKeeper and JobSeeker, financial lifelines which have particularly helped workers in less stable jobs in tourism, hospitality and retail.

Ski instructor Ruth Fryer (above) returned to Australia prior to travel restrictions. She lost her "between ski seasons" job at a distillery and went on JobSeeker. But with a rare medical condition, it did not cover her bills.

So Ms Fryer listed all her unwanted items on Facebook Marketplace. She raised $400, which covered her appointment costs, and enjoyed the goodwill of the sales. "Not only are we downsizing the number of things we have, but we are creating a sustainable cycle," she says.

Jobs

The industries hiring right now

As Australia emerges from the depths of the pandemic, there are several industries hiring right now. Thousands of jobs are being created in healthcare, trades and services, IT, manufacturing and logistics, as well as community services and development.

Investment

How Marley Spoon is a tasty buy

Australians spending more time at home are also spending more time online shopping. While Afterpay and Amazon have made headlines, online food box companies such as Marley Spoon have seen their stock prices soar. The company's revenue jumped 70 per cent in the March quarter.

Property

Sydney's clearance rate booms, Melbourne slumps

Almost half of Melbourne's scheduled auctions were pulled in the week to Saturday, due to the city's COVID-19 outbreaks. A robust Sydney pushed the city's preliminary auction clearance rate to its highest level in almost two months.

This is sponsored content for Together Australia.

Clever Money: How to save $5,333 off your home loan
Clever Money: How to save $5,333 off your home loan