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Date Published : Thursday, June 05, 2008
Many banks across Australia are up-selling their mortgages, with more than half of borrowers across the country deciding to buy other financial products with their home loan in order to get discounts, a new report has uncovered.
Research by ratings agency Cannex has found that borrowers can save between $500 and $1,500 a year by bundling a home loan with other financial products, such as personal loans, credit cards and savings accounts.
According to the company, while the cost of packaging financial services is not free, it is usually outweighed by the savings made.
Cannex financial analyst Peter Arnold said borrowers can expect discounts of 0.4 per cent and 0.7 per cent on a standard variable home loan rate if they package their home loan.
He told news.com.au: "The cost of this annual fee is quickly outweighed by the savings gained through the interest rate discount."
However, in some cases, mortgage lenders are forcing borrowers to accept add-ons such as credit cards even if they have no intention of using them in the future.
"It should be remembered that the annual package fee is more than offset by the interest savings so if there are more suitable products on the market for you, tailoring your own combination of financial products might be a more beneficial way to go," he said.
Recent research by Cannex found that the mortgage industry is not doing enough to help first-time buyers on to the property ladder.
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