Banks aren't charities. In 2024, the big four made $29.9 billion in profit. Here's how your home loan contributes to that number — and what you can do about it.

Your Goals vs the Bank's Goals

In the 2024 financial year, just the big four Australian banks made a combined net profit of $29.9 billion. To put that in perspective, if you earned $1 million per year and saved every single cent, it would take nearly 30,000 years to match just one year of their profits.

A significant portion of that comes from home loan interest. This doesn't mean banks are evil — it just means their priorities don't always align with yours. Their goal is to keep your loan running as long as possible. Your goal should be to pay it off as quickly as possible.

The Real Cost of a 30-Year Loan

Take a $500,000 home loan at 6% interest over 30 years. The bank will tell you your monthly repayment is $2,997. Sounds manageable, right?

But over 30 years, you'll actually pay back a staggering $1,079,000. You borrowed $500,000 and paid more than double. The extra $579,000 goes straight to the bank in interest.

And here's the kicker: most of this interest is front-loaded in the first few years. That's why checking your mortgage balance after five years of faithful repayments can feel like you've barely made a dent.

Top Shelf vs Bottom Shelf Lending

When you walk into a bank and ask for a loan, they'll offer you the bottom-shelf option — the one that looks cheap, sounds simple, and has a low rate on the front. But it's the financial equivalent of cheap boots that wear out quickly and cost you more over time.

They do have better loans in stock — smarter structures, offset accounts, flexible repayment options that could help you pay your loan faster and save a fortune in interest. But they won't recommend those unless you ask for them. And you won't ask if you don't know they exist.

What You Can Do About It

The less you know, the more they earn. That's precisely why understanding how your home loan works is your most powerful financial tool. Even small tweaks to how you structure your loan and repayments can save you tens of thousands of dollars.

If you simply switch from monthly to fortnightly repayments on a $500,000 loan at 6%, you'll cut around five and a half years off your loan and save over $120,000 in interest. Add just $50 extra per fortnight, and you'll save another $40,000.

No gimmicks. No silver bullet tricks. Just understanding how the system works and using it to your advantage.

Want to know more? Talk to a broker who understands strategy, not just products. We're here to help you play a smarter game.