Are You Being Penalised For Sticking With Your Lender, paying lazy tax?
From electricity bills to phone plans, car insurance through to home loans, sticking with the same provider year after year could mean you’re paying “lazy tax”. Lazy tax is the penalty many consumers and homeowners are paying as a result of being complacent, not shopping around for the best interest rates, and failing to refinance when rates work in their favour. If this sounds like you, here are two ways to avoid paying lazy tax.
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Don’t set and forget
Research findings shows Australians are paying a staggering figure in the Billion’s in “lazy taxes” each year. A significant proportion of this is attributed to homeowners who are being charged a mortgage loyalty tax. Largely as a result of a “set and forget” mindset when it comes to their home loan.
Homeowners who start out on a reasonable interest rate gradually end up paying more than new customers do. As the rate gap between interest rates offered to new customers versus existing customers gradually widens over time. Many of these homeowners are missing out on significant savings simply by failing to refinance.
“The thing to take away is what interest are you paying, are you paying more than what the bank offers new clients, ask your lender to match it and don’t pay the lazy tax.”
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Review your home loan regularly
Homeowners who haven’t reviewed their home loan rates recently might be paying more than necessary. Compare your rate with those advertised for new customers to see if you could save. If you find a lower interest rate, it’s possible you’re paying a lazy tax – or mortgage loyalty tax – to your lender.
Borrowers who may be paying a lazy tax can either negotiate a lower rate with their existing lender or refinance with a new lender. In either case, it’s worthwhile having research into your options before deciding which is right for you – refinance or renegotiate. Talk to a mortgage broker, as there’s usually more to consider than simply interest rates.
But even the smallest decrease in interest rates can add up to significant savings over time. So it’s worthwhile reviewing your interest rates every 12 months to ensure you’re always getting the best rate available to you.
Lending Connections review existing customers loans on an ongoing bases so they don’t have to.
Don’t get caught out paying a lazy tax
While interest rates are high, that’s not to say all Australians are getting the best deal on their home loan. Not shopping around and comparing interest rates could mean you miss out on interest rate deals that are being offered by lenders to new customers.
Ask yourself:
What is the interest rate you’re paying now?
Are you paying more than what the bank offers new clients?
If you are, ask your mortgage broker to get you on to a better deal!
Contact Lending Connections to find out more.