Suburbs paying too much for their mortgages

IF YOU are living in these suburbs, it may be time to check your mortgage because you could be getting ripped off.

Data from online mortgage marketplace, HashChing, has revealed the suburbs in our biggest capital cities where borrowers are paying interest rates much higher than the capital city average.

According to the data, which analysed over 1,000 mortgage applicants over December 2016 and January 2017, Sydney’s most ripped off suburbs are The Ponds, Doonside, Quakers Hill, Campbelltown and Stanhope Gardens, with mortgagees paying up to 7.88 per cent in some cases — almost double the Sydney average of 4.46 per cent.

In Melbourne, homeowners are paying up to 7.04 per cent in these suburbs: Blackburn, Glen Waverley, South Morang, Mernda, Narre Warren and Cranbourne. The average interest rate in Melbourne is 4.46 per cent.

Meanwhile, homeowners in Queensland are paying off interest rates as much as 7.39 per cent in Coomera, Advancetown, Austinville, Labrador, Surfers Paradise, Brendale and Springbrook. By comparison, the average interest rate in the Queensland capital of Brisbane is 4.72 per cent.

HashChing CEO Mandeep Sodhi said the reason why these particular suburbs are likely to be paying off inflated interest rates is because they have a large self-employed population.

In fact, after further analysis from the detailed weekly comments from mortgage brokers using the HashChing platform, almost nine in 10 of the borrowers in these suburbs are self employed (87 per cent) with almost two thirds of them having investment properties in these suburbs (62 per cent).

“What we believe is, in those postcodes there are a lot of people who are self-employed, and that is a trend which is common across all states,” Mr Sodhi told

“We have noticed that where consumers are paying interest rates of more than 5 per cent it turns out they are usually self-employed or used to be self-employed.”

Traditionally, banks have viewed self-employed borrowers as riskier because their income isn’t as stable and they often don’t have the ability to provide the depth of information usually required to apply for a home loan.

But Mr Sodhi said this isn’t necessarily the case anymore as banks are becoming more accepting of self-employed borrowers and smarter about servicing this important segment.

“It’s not a bad thing to be self-employed ... If you are making your repayments on time, it is time for you to look for a better deal and a better bank. [The banks] are becoming more accepting of it.”

What this means now is that there are loads of self-employed borrowers unaware they are able to get a better rate, he said.

“The findings were shocking,” Mr Sodhi told

“Many self-employed borrowers are paying well over 5 per cent and some are even paying more than 7 per cent thinking that is the best rate they can get.”

And this is despite interest rates being at historical lows.

The average interest rate for self-employed borrowers across the country, according to the HaschChing data, ranges from 5.44 per cent in Melbourne to 5.81 per cent in Perth. This is sometimes more than 1 per cent higher than the average rates offered to similar PAYG borrowers, which range from 4.46 per cent in Sydney to 4.89 per cent in Adelaide.

So if borrowers compare rates and switch lenders, Mr Sodhi calculates they can save as much as $87,383 over the life of their loan, based on a 1 per cent saving on a $500,000 loan with a 25-year term.

“Responses from borrowers to this was that they were damn frustrated ... They thought they were loyal customers of 20 or 30 years but suddenly their bank wasn’t telling them about new or lower rates. The bank never bothered to give them a call and get them a better rate. And they never bothered to compare.” 8, 2017