Home loan savings

Being ''mortgage-savvy'' can save you thousands on your repayments, Canstar general manager Derek Bonnar says.

Releasing the latest annual home loan star ratings, Mr Bonnar said buying a home was one of the most exciting, emotive and expensive activities people were likely to undertake. He predicted that by following a few tips, ''typical'' homeowners could save more than $100,000 over the life of their loan.

''The New Zealand property market is booming right now, which creates a sense of urgency for some buyers. In their enthusiasm to get into the market, they sometimes don't stop to consider how to best structure their mortgage.

''Being mortgage-savvy is so important because it's the biggest debt that most people are ever likely to have and it can cost hundreds of thousands in interest payments over the years,'' he said.

For many mortgage holders, their typical $300,000 loan could cost them nearly $635,000 by the time they paid it off. That was assuming the current low interest rates remained. If rates rose by 2%, the same mortgage would cost nearly $780,000.

Mr Bonnar said home buyers and owners should negotiate a lower interest rate. Financial institutions wanted business and some would reduce their rate to attract and retain customers. Negotiating a lower interest rate and maintaining monthly payments at the previous level could save homeowners even more. A 0.25% reduction on standard rates, plus keeping repayments the same, could save a total of $41,400 in interest.

Increasing regular payments could also make a difference.

''While it's more fun to spend them on something else, occasional ad hoc payments can make a significant difference to your mortgage as well. A tax refund, for example, or a work bonus made as an extra payment helps.''

Across the seven loan categories assessed, several mortgage providers stood out as offering ''five-star'' value, Mr Bonnar said.

Those included Kiwibank, achieving a five-star rating in six of the loan categories, followed by Westpac with a five-star rating in five categories. BNZ achieved five-star rating in the standard home loan and investment home loan categories and ANZ was five-star rated in the line of credit, residential long-term and investment long-term categories.