February 24, 2016
The majority of Australians have never changed or reviewed their financial institution, preferring to use the one lender for all of their needs.
According to Mortgage Choice's Money Survey, 46% of respondents said they were ‘loyal' to their financial institution and as such, had not seen the need to switch institutions or have a relationship with multiple lenders.
Speaking about the results, Mortgage Choice chief executive officer John Flavell said while there is nothing wrong with being loyal to the one banking institution, it is important for Australians to make sure the lender they choose to partner with is meeting all of their needs.
“Looking at the data, the number one reason why Australians switched lending institutions was because they could source a higher savings rate elsewhere. The second most popular reason for changing lenders was because Australians found a better home loan deal with another financial institution,” he said.
“Both of these reasons are valid motives for changing lenders. Some Australians are acutely aware that there is another lender on the market that can offer them a better deal or rate that suits their needs.
“Those who decide to partner with a lender that perfectly suits their needs will find they reach their financial goals sooner.”
Mr Flavell said it isn't difficult for Australians to review and potentially change lending institutions.
“There are a few easy steps that all Australians can take to ensure they partner with the right financial institution,” he said.
Step 1: Know what you want from a lender
“All Australians have a unique set of financial needs and goals,” Mr Flavell said.
“As such, it is important to partner with a lender that meets our unique needs. Of course, before we can choose the right lender, we need to know who we are and what we want from our financial lending institution.”
Those who are wanting to grow their savings and make their money work harder may need to look for an institution that offers a great high interest savings account product. Alternatively, mortgage holders may find there is more benefit in partnering with a lender that offers a sharp home loan package and interest rate.
“Regardless if you are looking for a lender with low home loan interest rates or one that allows you to take money out of any ATM in Australia and not be charged a fee, there will be a lender out there that meets your needs,” Mr Flavell said.
Step 2: Do your research
Once you have identified what you want from your lender, Mr Flavell said it is important to jump online and research which lenders can successfully meet your needs.
“There is a range of great comparison websites where you can see what each lender offers and compare them against others in the market,” he said.
Step 3: Read the fine print
When selecting a lender you want to partner with, Mr Flavell said Australians should take extra time to read the fine print and make sure there are no hidden fees or charges.
“It is important to know exactly what you are getting yourself in for,” he said.
“If you are signing up to a new savings account, check the fine print and see whether or not there are any fees and charges associated with that particular product. For example, do you have to deposit a certain amount of money each month to avoid paying the account keeping fee?
“If you are looking to partner with a lender that offers free usage of any ATM in Australia, read the fine print and make sure there are no conditions on how much money you need to withdraw from the ATM each time you use it. The key is to go through your lender contract with a fine tooth comb and make sure there aren't any hidden fees or charges you aren't comfortable with.”
Step 4: Make a list of ‘need to know items'
In addition to reading the fine print, you may find you have some additional questions that you would like answers to. Before you sign up to the lender or product, make a list of everything you would like to know about the product.
“Once identified, you can drop into a branch or give your preferred lender a call and ask the burning questions you have listed,” Mr Flavell said.
“This should provide you with the peace of mind you need to know you are making the right decision.”
Step 5: continue to review your needs
Even after you have done your research and decided upon a lender, it is important to continue to review your financial relationship on a regular basis.
“Australians shouldn't take a set and forget attitude towards their finances,” Mr Flavell said.
“It is important to be proactive when it comes to your finances and research your options regularly. As a general rule of thumb, it is a good idea to review your financial situation at least once a year or every time you make a significant financial decision – whatever comes first.”