Home Loans: Mortgage Secrets The Banks Don’t Want You to Know

How to Outsmart the System and Save Thousands on Your Home Loan

Buying a home is one of the most exciting yet financially daunting journeys you’ll ever take.

For many South Australians, the mortgage process feels like stepping into a complicated, high-stakes game where the banks hold all the cards.

They advertise attractive loan packages and promise to help you achieve your property dream, but behind the scenes, their goal is simple: profit.

And the truth? The less you know, the more money they make.

But what if you knew the tricks they use to maximise their earnings—and how to flip the script?

Here, we’re uncovering the hidden costs, negotiable fees and smart mortgage strategies that can help you come out on top.

With expert insights from Kate Barnett, Managing & Finance Director at We Connect Property, you’ll gain the confidence to take control of your mortgage and your financial future.

How banks profit from your loan

Banks don’t just lend you money—they sell you a product.

And like any business, they’re in it for the profits.

Put simply, the longer you take to pay off your mortgage, the more they earn in interest.

This is why standard loan terms stretch to 25 or 30 years—it maximises their return on investment.

“The biggest mistake buyers make is thinking that their mortgage is a set-and-forget deal,” says Kate.

“But small, strategic adjustments in how you structure and repay your loan can save you tens of thousands in interest.”

So, how do you keep more money in your pocket?

Consider making extra repayments early on, setting up an offset account or opting for a loan structure that balances flexibility with long-term savings.

These simple steps reduce the principal faster, cutting down the interest you pay over the life of the loan.

The fees you should challenge (and the ones you can’t avoid)

Every home loan comes with costs, but not all of them are set in stone.

Some fees are government-imposed and unavoidable, while others are lender-specific and negotiable—if you know to ask.

Unavoidable costs in South Australia:

- Stamp Duty: This varies based on property value but can be as high as $20,000 for a $400,000 home.

- Land Services SA Fees: Based on the property’s value, these fees can add up to several thousand dollars, and cover things like title transfers, registration, lodgement and transaction fees

- Mortgage Registration Fee: A fixed government charge of $192.

Fees you can (and should) push back on:

- Loan establishment fees: Banks often charge up to $900 just for setting up your loan! However, many will waive this if you negotiate.

- Rate lock fees: Some banks charge a fee to secure an interest rate. It’s often unnecessary and can be avoided by asking.

- Document preparation fees: A $300+ charge just for printing your loan documents? No thanks. Challenge this—many lenders will remove it when asked.

“Banks count on borrowers being too nervous to question fees,” says Kate.

“But when you ask, you’ll often find they can be flexible. Never accept a bank's fee without questioning it.”

How to avoid getting trapped in a bad loan

A mortgage isn’t just about the rate—it’s about how the loan fits into your long-term financial strategy.

Many borrowers blindly accept the first deal offered, only to find themselves locked into an inflexible loan that costs them more in the long run.

Interest rates fluctuate, and different loan structures react in different ways.

Fixed-rate loans offer stability but come with harsh break fees if you want to refinance early.

Variable loans follow market movements, which can be risky in times of economic uncertainty.

A strategic approach? Consider a split loan, which divides your mortgage into both fixed and variable portions, offering a balance of predictability and flexibility.

For instance, many buyers locked into 1.5% fixed-rate loans in 2018. When rates dropped to historic lows in 2020, they faced huge break fees to refinance at a lower rate. Had they split their loan, they could have taken advantage of the lower rates without such a costly penalty.

The costly trap most buyers overlook: Lenders Mortgage Insurance

Many first-time buyers assume that Lenders Mortgage Insurance (LMI) protects them.

But in reality? It’s there to protect the lender.

If you borrow more than 80% of a property’s value, most lenders will charge LMI—adding thousands to your overall costs.

Ways to avoid or minimise LMI:

- Save a 20% deposit before applying.

- Use a family guarantor loan to sidestep the LMI requirement. This allows a close relative—typically a parent—to use a portion of their home’s equity as security for your mortgage. It’s a great option for families who want to help their children enter the property market sooner without a hefty insurance cost.

- Shop around—some lenders offer lower LMI rates, or allow upfront payments to reduce costs.

- Government schemes—research government initiatives that are designed to assist first-time buyers in purchasing a home with a smaller deposit without incurring LMI. For instance, the First Home Guarantee Scheme allows eligible buyers to purchase with as little as a 5% deposit.

“LMI is a major profit centre for banks,” Kate explains.

“But many buyers don’t realise they can negotiate a better rate for it, or avoid it entirely with the right approach.”

By exploring these strategies and consulting with a knowledgeable mortgage broker, you can potentially save thousands of dollars and make your journey to homeownership more affordable.

The hidden superpower of your mortgage

A well-structured mortgage isn’t just about the rate—it’s about how you manage the funds within it.

Enter offset accounts & redraw facilities.

These provisions can significantly reduce the interest you pay and give you financial flexibility.

What’s the difference?

- Offset account: A savings or transaction account linked to your mortgage. Every dollar in this account offsets your loan balance, reducing the interest charged.

- Redraw facility: Allows you to access extra repayments you’ve made if needed. However, some lenders impose withdrawal restrictions and fees.

“People can potentially save thousands using things like offset accounts,” advises Kate.

“By depositing your savings into an offset account rather than a traditional savings account, you minimise the interest you pay across the life of the loan, while still having access to your funds.”

The Value of a Professional Mortgage Broker

Navigating the complexities of home loan options can be overwhelming, which is why seeking the guidance of a professional mortgage broker can be invaluable.

Unlike bank advisors who only sell their own products, mortgage brokers have access to a wide range of lenders and loan products, giving you more options than you might find on your own.

They can help you compare different lenders, identify beneficial features and negotiate better terms on your behalf.

“A good mortgage broker doesn’t just find you a loan—they find you the right loan,” says Kate.

“With their expertise, buyers can secure a mortgage that aligns with their financial goals while avoiding unnecessary costs like LMI.”

By working with a mortgage broker, you can gain clarity, save money and feel confident that you’re making the best financial decision for your future.

Here are some great local Adelaide brokers we are happy to recommend:

- Annette Tothill - tothillfinance.com.au

- The Finance Nest - financenest.au

- Soda Financial Services - sodafin.com

- NJK Finance Brokers - njkfinance.com.au

Take control of your mortgage

The simple truth? Banks profit from uninformed borrowers.

By educating yourself on fees, loan structures and repayment strategies, and getting professinal advice, you can make smarter decisions that save you thousands.

Here are a few tips to remember when considering a property purchase:

- Always question fees—many can be waived or reduced.

- Structure your loan wisely—consider split loans, offset accounts and extra repayments.

- Compare lenders—big banks aren’t always the best option.

- Think beyond the rate—terms, flexibility and hidden costs matter just as much.

And remember, the best mortgage isn’t just about securing a low interest rate—it’s about structuring your loan to work for you, not the bank.

Take control of your mortgage today, and you’ll thank yourself in years to come.

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Ready to sell your home or find your next one? If you’d like some expert guidance and support, we’re ready and waiting to help.

As property experts with over 21+ years combined experience in buying, selling and managing property in Adelaide, We Connect Property can offer expert guidance and support when you need it most, and answer all your questions about buying your next property.

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DISCLAIMER: All recommendations made by We Connect Property are general in nature and not to be relied upon as legal or financial advice. To ensure accuracy, we always strongly recommend seeking independent, professional advice tailored to your specific situation before making any investment or financial decisions.