Consumer finance lawyer Michael Tull says the biggest risk to an Australian mortgage is being overcharged or undercharged for a mortgage loan.
The industry watchdog’s advice comes after a series of high-profile consumer debt crises, including the $2 billion A$3.9 billion recall of Home Depot’s Powerball lottery winnings in 2013 and the $5.5 billion A $3.4 billion recall last year of Australia’s biggest home-improvement retailer, Coles.
“When a consumer’s mortgage is in arrears, there’s a good chance they’re getting a much worse deal than the other person,” he said.
The consumer finance law firm of law firm Jones Day has been lobbying the Federal Government to make it easier for people to refinance a mortgage, as the number of defaults has more than doubled in the past year. “
So it’s very important that they understand that if they’re overcharging, they’re likely to get a worse deal.”
The consumer finance law firm of law firm Jones Day has been lobbying the Federal Government to make it easier for people to refinance a mortgage, as the number of defaults has more than doubled in the past year.
It is currently capped at a maximum of three per month.
Consumers are also able to refinances when their monthly payment falls below $500.
However, the government has warned that this may not always be the case.
“In the short term, if you don’t have a deposit in place to cover your repayments and you’re on the market for an expensive home, you might find that you’re actually going to end up paying more to buy than you’d have paid for the property,” Ms Tull said.
Ms TULL said that if a consumer were to apply for a new mortgage, it would not necessarily mean they were getting a better deal than their other option.
“You would need to look at their repayment history to determine if they might be overcharging,” he explained.
“If you look at the average rate of interest on a mortgage of three to four per cent, you’d be looking at a loan rate of around 30 per cent.”
Consumers can use the “new and existing mortgage refinance calculator” to check if their current mortgage may be eligible for a refinance.
“We’re also looking at what other types of loans are out there for a consumer, whether they are on credit cards, for example, or what’s a reasonable cost of buying a house,” he added.
“It’s not an exact science, but it can give you an idea of what might be available for a typical consumer.”
The Australian Consumer Law Reform Association (ACLA) has been urging the government to reform the mortgage lending process for people in the home-buying market.
It says that many people who borrow to buy a home may be able to get help from the consumer credit regulator to refortify their loans, but that this is not the case for people who have been overcharged for their home loans.
“A mortgage referrals calculator will help consumers who are under- or over-charged for mortgage loans understand what they might get out of their new mortgage,” ACLA chief executive Andrew Wilson said.
Consumer finance expert Michael TULL says the major risk to the consumer finance industry is being undercharged or overcharged.
“People are getting loans that are overpriced,” he told ABC News Breakfast.
He said the mortgage refrains calculator offered “a helpful tool” to consumers looking to make sure they are not overcharging. “
For example, if your repayment is higher than the maximum you can repay, you may end up being paying more.”
He said the mortgage refrains calculator offered “a helpful tool” to consumers looking to make sure they are not overcharging.
“And there are some great resources out there that will tell you if you can get a better mortgage, and what the average loan is going to be for the price of your home,” he suggested.
Consumer Financial Protection Bureau spokeswoman Anna Pavey said the consumer rights body’s advice on mortgage refinances was based on the latest evidence.
“Consumers should understand that it is their responsibility to ensure they are fully aware of the terms and conditions of their mortgage, especially if they are overcharged,” she said.
She said the bureau had not yet received the latest data on consumer refinances, but the bureau was looking into the issue.
“That information will be shared with the consumer if it becomes available,” Ms Paveey said.