How an old mortgage landed aged care worker Deb a $33k payout

Exclusive: When Debra Gray received a text saying she was owed a $32,760 home loan refund, she thought it was a scam.

The 64-year-old was so suspicious that she handed over details for an account with barely any money in it, just in case.

But a week later, the cash landed in her account.

“I couldn’t believe what I was seeing. It all seemed too good to be true,” the regional NSW aged care worker, who lives in Quirindi, told nine.com.au.

Up to one in three Australian households have been sold junk insurance – optional add-on policies such as Consumer Credit Insurance (CCI) sold alongside home loans, credit cards, and personal loans.

Major banks scrapped the products after the 2019 banking royal commission found they offered customers poor value for money.

Canstar data insights director Sally Tindall said many borrowers had no idea they had even purchased the cover because it was quietly bundled into their loan paperwork.

“It was often presented as part of the lending process, rather than as a separate product that borrowers properly considered and compared,” Tindall said.

Gray took out her mortgage with ANZ in 2014 after she and her husband moved into her mother’s Tarbuck Bay home.

Her mother needed extra care, and the house needed renovations, so Gray turned to the bank she had used since she was 16.

Because her mother owned the property, Gray had to include her on the loan paperwork.

“I was employed full-time at this stage and was more than happy to make the full payments on the loan,” she told nine.com.au.

“But I raised concerns that should something happen to me, I didn’t want my mother to have the burden of the mortgage to pay as she was on only an age pension.

“I was offered extra insurance by the bank to ensure this would cover all costs.”

Gray paid for the insurance until she turned 60, when the insurer told her it could no longer cover her.

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She arranged her own policy and eventually sold the property after her mother died – a common outcome for borrowers sold restrictive add-on policies.

“An ASIC report from 2019 found that for every $1 spent on these policies, just 19 cents was paid out. For credit card insurance, that figure was just 11 cents,” Tindall said.

Gray had no reason to question the product until 2024, when her husband saw a news report about people claiming refunds for mis-sold financial add-ons.

Still, she dug through her old paperwork and sent the documents to claims company Claimo to investigate.

Claimo says it has helped Australians recover more than $50 million in recent years, with its heftiest payouts linked to old home loan policies.

“The insurance premium was often based partly on the size of the loan, so a larger mortgage could mean higher premiums and, potentially, a larger refund,” managing director Nathan Mortlock said.

“Refunds over $30,000 are more common than many people think, particularly for policies sold alongside home loans by a major bank.”

Tindall said while more than $160 million has been returned to 434,000 consumers, many remain unaware they are entitled to the refunds.

After clearing her own payout, Gray hopes sharing her story helps others uncover forgotten money.

“There must be so many people in the same situation that I was in and have absolutely no idea they were being taken advantage of,” she said.

ANZ declined to comment when contacted by nine.com.au.

The bank no longer offers Mortgage Protection Insurance or any other Consumer Credit Insurance products.