Banking Reforms - How It Will Benefit You?

The Australian Government is introducing a range of measures to the banking system which increase competition to help you get a better deal.

The first reform is a ban on mortgage exit fees on new home loans from 1 July 2011.

Why ban on mortgage fees is good for you?

This measure will help boost competition in the home loan market over time, by giving consumers greater freedom to walk down the road and get a better deal.

Some lending institutions have already removed exit fees on home loans, while others are offering to pay your exit fees for you if you switch, so shop around.

  • Increased competition makes it easier to switch to a better deal
  • Banking reforms enable more financial choices
  • Lending institutions hiding unfair fees can be fined
  • Some lending institutions have removed fees on existing contracts.

First home buyers will benefit from the abolishment of exit fees from the 1st July, 2011.

Although there will now be no costs for switching mortgages, homeowners with an existing home loan will be subject to exit fees and will therefore face bigger restrictions for the life of their loan, which is usually 25 years.

Borrowers and first time home buyers need to be aware that exit fees are just one cost for breaking your loan contract and that there are a range of other fees and charges that could be incurred. Some of these other fees are discharge fees, documentation and legal fees, as well as establishment fees to set up your new home loan.

Under new law lending institutions that seek to re-badge their current mortgage exit fees as upfront entry fees or any other type of fee in the future can be fined under the reforms introduced from 1 July 2011.

Consumers need to shop around and compare the various products on offer and find the best deal.

Give us a call on 1300 793 143 or fill out the form on this page and let our mortgage broker find you the best deal to suit your requirements.

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Published on June 6-th, 2011 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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Any information or advice contained on this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs.