How to pay down all your debts at once
EXCLUSIVE: Debt-laden Australians trying to pay off mortgages and credit cards can wipe both more quickly by breaking up with the Big Four banks.
Westpac, the Commonwealth, NAB and ANZ are all offering variable home loan packaged deals in the mid four per cent rage, new analysis shows - one percentage point more than the best deals on the market.
The financial services Royal Commission has shone a light on the bad behaviour in the sector and experts say this should force customers to seek out cheaper deals.
Financial comparison website Mozo found Australians can save as much up to $3000 per year just by switching from the highest Big Four variable home loan rate of 4.87 per cent to the cheapest on the market at 3.44 per cent.
This is on a $300,000 30-year home loan.
With the average credit card debt sitting at $4200, these mortgage savings could be used to erase a customer's plastic debt in less than two years.
Realestate.com.au's head of home loans Andrew Russell has urged mortgage holders to begin by checking to see what their interest rate is before taking any action.
"If your rate doesn't have a "3" in front of it go and speak to your mortgage broker," he said.
"From there you can refinance or possibly go back to your current lender if you're happy with their service and ask for a better deal."
The Reserve Bank of Australia board has kept the cash rate on hold at 1.5 per cent since August 2016, but despite this banks have been moving interest rates up and down regardless.
Three of the Big Four banks - excluding National Australia Bank - all revealed they were hiking their standard variable rates due to wholesale funding costs rising.
But the home loan market has also slowed, putting more pressure on lenders and brokers to drum up new business.
Mozo's spokeswoman Kirsty Lamont said borrowers needed to take control of their finances and jump on board these cheaper deals.
"To make those savings work even harder for you, consider putting them towards any credit card debt you may have so that you can save on your mortgage bill and pay off your credit card at the same time," she said
"Taking charge of these two common forms of debt at once is a win-win strategy that will deliver huge savings for years to come."