Cash for Loans

Reporter: Laticia Gibson

The official word is - when it comes to money, Australians are lazy. But now there are 300 reasons to run a magnifying glass over that mortgage. "If we can't demonstrate how we can save you substantial money we'll cover your time by paying you $300 for your time."

According to John Symond from Aussie, banks have had it too good for too long. Now he's setting a one month challenge to customers ... he'll beat your mortgage deal or he'll pay you. "You would have to spend two or three months canvassing dozens and dozens of lenders who might to or twenty or thirty different home loans - thousands of different home loans. It's impossible job to do."

"When I set the loan up it was around 7 per cent it's now around 9.44% so obviously that's quite an increase." As home loan rates teeter on the edge of ten per cent - it's an incentive that homeowner and single mother Di Robinson has been needing. "You realise that you are actually paying quite a lot more per month that perhaps you really need to."

With inflation at a sixteen year high, Di's monthly repayments have increased $500 a month. As brokers, Aussie does the homework for you or in Di's case adviser Martin Gibson-Brown, convinced he won't be handing over a $300 cheque.

"Anything that encourages people to study their own financial situation on a regular basis has to be viewed as a positive." After twelve interests rates in a row and more expected, Denis Orrock of Infochoice hopes that such incentives will spur banks to start looking after customers. But warns there are dangers in changing loans.

"You can actually find a cheaper loan out there that will give you monthly cash flow savings but you incur a fee which can be in some cases can be over $5000 you're really chasing fools gold" says Denis.

94 % of banks charge an exit fee. An investigation into such charges by ASIC has identified some banks charging over 3% of the total loan, that means to switch a $250,000 loan it would cost you nearly $8,000. Such figures reveal a frightening stronghold by banks. Early termination fees here, more than four times higher than in the United Kingdom and the United States. And that's where Aussie's unique program comes in. By analysing interest rates, exits fees and charges. There are no surprises when the move is made, ensuring you get the best deal available at that time.

So has Di made a saving or will she be receiving a cash bonus? "We're actually going to reduce your monthly repayments by $162 a month and over the total term of the loan we are going to save you interest of over $54,000" Martin tells Di. And there's better news. If Di reinvests that saving and makes fortnightly payments she'll save $260,000 in interest and take over 8 years from the term of her loan. "The potential of saving of what could be a quarter of a million dollars is very exciting - could change things completely" says Di.

"The only way you are going to enforce change on lenders and on banks on fees etcetera is by voting with your feet and moving" says Denis. If you would like more information about recent federal government plans to make switching easier or to take advantage of the Aussie challenge, please see the information below: