Many mortgage borrowers want to switch to a cheaper lender after their banks raised interest rates independent of the Reserve Bank.

But they’re confused about how much money they will save, what options they have outside the major banks, and whether it is worth the hassle of switching.

Let’s start with the first question: two customers have an average $350,000, 30-year mortgage. The Westpac customer, with a standard variable rate of 7.46 per cent, will pay $55,440 more over the life of the loan than the Yellow Brick Road customer who has a rate of 6.84 per cent.

Even a NAB customer will pay $38,160 more than a Yellow Brick Road customer.

So your first job is to know how much you will pay over the life of your loan and how this compares.

The second question is what mortgage options are available? You could research the comparison web sites, or if you don’t have the confidence to do it yourself, see a mortgage broker.

There are many comparison sites available on the internet, but I would start each search with a list of what you like about your current loan, because there may be features that you have come to rely on.

A mortgage broker knows the market and it’s very rare that a broker can’t find a better loan than the one you have already.

A search of mortgage options will turn up credit unions, regional banks, building societies and mutuals that you’ve never heard of.

Don’t be put off by their supposed obscurity. According to Abacus, the industry body for the mutual sector, there are 119 mutual lenders in this country with a combined 4.6 million customers. These lenders are usually the ones with the lower interest rates because they don’t aim for the high profit margins of the big banks.

Armed with your options, is it a hassle to actually change a home loan?

That depends on how organised you are. Personally I don’t think a few hours of collecting paperwork is a high price to pay for saving $40,000.

You’ll need proof of identity, of employment and of earnings and you’ll receive a written loan offer in which the new lender will commit to ‘buying-out’ your current loan, without exit fees of course.

Nine times out of ten your current bank – when contacted by the new lender – will offer to match your new rate.

Having gone through this process, you now have real choice: you have answered your own questions and gained some control over your financial life.

But choice is worth nothing unless you are willing to act. To really get the best mortgage you may have to change your attitude.

* Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on mark.neos@ybr.com.au with any queries you may have or check www.ybr.com.au for your nearest branch.