Australians are increasing their home loan repayments, saving money

author-avatar By on February 24, 2021
Australians are increasing their home loan repayments, saving money

Australians are loosening the mortgage belt and getting ahead on their repayments, according to Greater Bank.

The customer owned bank said more customers are paying off more of their home loan than ever, with over 75% of its mortgage customers more than one month in advance on their mortgage repayments as at 31 January 2021. 

As an example, it said customers with a $300,000 Ultimate Variable Home Loan with a loan term of 30 years could save $16,051 and reduce their loan term by two years just by paying an additional $20 a week on their loan.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Rates correct as of September 25, 2021. View disclaimer.

Treasury figures show that Australian households deposited $100 billion more in their savings accounts in the 12 months to the end of November 2020, as Australians changed their spending habits due to uncertainty around employment and finances as a result of COVID-19.

During the same period, Greater Bank reported an increase in customer home loan repayments, which the bank says also aligned with the availability of more flexible repayment options on home, personal and business loans.

Greater Bank CEO Scott Morgan said for many Australians a home loan is the biggest debt they will ever have, and it's important to pay it off as soon as possible.

“Customer research that we undertook in November last year highlighted that paying off their home loan sooner was the number one financial priority for our customers,” Mr Morgan said.

“While COVID placed financial stress on many customers, it also provided an opportunity for us to work closely with those affected to ensure they remained financially secure through the pandemic, but also for many customers to actually improve their financial position by paying more off their home loan.

“On the back of recently released, record low home loan interest rates, customers continue to be well positioned to reduce both the interest payable and term of their loan, and realise their dream of owning their home sooner,” Mr Morgan said.

Customer-owned Greater Bank recently slashed its 'no-frills' one-year fixed rate to 1.69% p.a. (3.49% p.a. comparison rate*) making it one of the lowest fixed rate owner occupier loans on the market.

See also: The pros and cons of lowering your home loan repayments

How much you could save by making extra home loan repayments

Customers can potentially save a lot of money over the years by paying above the minimum required repayment. 

If your home loan allows you to make extra repayments you can pay off your loan faster - even just contributing an extra $100 a month could shave off thousands in interest over the life of your loan. 

For example, if you took out a $400,000 home loan with a loan term of 30 years, here's how much you could potentially save by contributing an extra $100 a month after the first five years according to Savings.com.au research:

Interest RateMin RepaymentAdditional contributionInterest saved by extra repaymentsTime taken off loan term
1.80% p.a $1,439/month $1.539/month $7,198 2 years
2.50% p.a $1,580/month $1,680/month $10,621 2 years
3.60% p.a $1,819/month $1,919/month $16,858 2 years 

Calculations via Savings.com.au's Extra & Lump Sum Payment Calculator.


Photo by Samson Katt from Pexels

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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