ARE YOU PAYING TOO MUCH ON YOUR HOME LOAN?

December 20th, 2022 by Tony

ARE YOU PAYING TOO MUCH ON YOUR HOME LOAN?

Last week I had decided that enough was enough. I was paying too much on my home loans.

I was done with endlessly rising home loan rates, so I picked up the phone and made a call to the three offending banks, that had passed on what seemed like an ongoing supply of interest rate rises all courtesy of the Reserve bank of Australia.
I was firm, polite and straight to the point. I said that I was after a better home loan rate, and I could see was being offered at the CBA. Was 4.99% (excluding the rise of .25% on 6th December)

Here was the result of just 3 phone calls:
·       Liberty 7.79% to 6.69% (Still high but this is commercial we are kind of stuck for financing until we move back to Australia as foreign income earners)
·       NAB 7.03% to 4.99%
·       Westpac 6.95% to 5.95%

Most lenders aren’t going to just spontaneously offer you a better rate – you’re going to have to ask for it.
Here are 4 things you need to do before making the call:
1. Be a responsible borrower
Before you even think about asking if you can get a reduced interest rate, it’s smart to make sure you are the model borrower.

Having a history of late repayments, for example, will likely reduce your chances of getting a lower rate.

If you weren’t the perfect borrower in the past, it’s a good idea to take the time to work on making regular, on-time repayments so that you can justify requesting a lower interest rate.

2. Check out your current lender’s interest rates
Before you request a lower rate, it’s smart to research and know what rates your existing lender is offering new customers.
If your current interest rate is lower than the rate new customers get, you’re probably not going to have much luck lowering yours even further.

https://www.canstar.com.au/home-loans/
Check here for the latest rates.

If you haven’t checked in a while and have been with your lender for some time, you may not have the most competitive rate.
This is particularly likely if you were previously on a fixed rate home loan that reverted to your lender’s standard variable rate at the end of your fixed term. These standard variable interest rates are often higher than average variable rates.
3.    Ask for the rate that new customers get
It’s important to find out what rates your lender is offering new customers. It’s very possible that these rates will be lower than your current interest rate.
4.    Take advantage of your customer loyalty
Your loyalty as a customer could be one of your greatest negotiation tools. If you’ve been with your lender for a long time and have a positive history with them, you may be able to use this to your advantage.
Come into the negotiation prepared and with the facts ready. You can tell them how many years you’ve been with them and prove your reliability as a borrower by highlighting your repayment history.
What if my lender refuses to lower my interest rate?
If at the end of the negotiation they haven’t budged, it may be time to ask for a mortgage discharge form.
If you’re not a confident negotiator, it’s a good idea to get an expert to negotiate on your behalf.
Our office has some great choices for you to consult as brokers.  There is no obligation, and we don’t make any kickbacks.

We just want to help.

p.s. Jump on our blog to see how paying too much on your home loan can make a big difference over time.

When the boom effect of Compounding Interest kicks in. – Igniite | Igniite