When it comes to finding a cheaper home loan, quite a few people within the real estate world would tell you that there are a couple of ‘unwritten rules’ that borrowers should be aware of. These include the perception that smaller lenders tend to be more flexible than ‘the Big Four Banks’, that having an independent mortgage broker to help you find the right loan can save you a lot of time and money, and that if you want a cheaper home loan you need to ask for a better deal.
Will Banks negotiate?
With these in mind, it was interesting to read that one of the mortgage comparison websites had recently conducted a ‘shadow-shopping’ exercise to see how the Big Four Banks dealt with customers who wanted to negotiate a cheaper home loan.
What happened was that they asked their staff members to pose as first home buyers, investors and home owners who were looking to refinance. They then asked each of the Big Four Banks for a discount on their published rates. The findings were that simply by asking for a cheaper home loan, it was possible to save a substantial amount over the period of your loan, with the banks offering discounts of up to 0.82 per cent in some cases!
Cheaper home loans are available
Interestingly, the survey found that those who already had a home loan could save more than those who were applying for a new purchase, with homebuyers being offered up to $45,000 over the life of their loan, whilst refinancers were offered savings of up to $86,000.
Another interesting finding was that of the Big Four banks, the Commonwealth was found to be the most flexible for first-home buyers, refinancers and investors. Westpac was judged to the most difficult to negotiate, although it often offered to price match offers from competitors.
Key findings included:
- Refinancers were offered discounts from 4.62% to 3.80%, which equates to more than $2,800 in annual savings on a $500,000 loan.
- First-home buyers were offered reductions from 4.72% to 4.00%, which would save more than $1,500 per annum on a $300,000 loan.
- Investors could see their rates reduced from 5.54% to 4.82% producing annual savings of around $3,600 on a $500,000 loan.
Try asking for a cheaper home loan
The message here is a simple one. If you’re in the market for a cheaper home loan, make sure you ask the question about discounts. Of course, if you’re not comfortable doing that, you can always ask an independent mortgage broker to do it on your behalf. Their service won’t cost you anything.
And speaking of service that won’t cost you an extra cent, don’t forget that Ian Reid’s Vendor Advocacy is a service that won’t cost you an extra cent when you sell. So, if you’d some tips on how to avoid extra costs and stress when selling, be sure to get a copy of our booklet Fatal Real Estate Traps Exposed. While you’re here on our website. It’s free!
09/24/2024 
