How To Negotiate A Better Deal On Your Mortgage?
After several open-house inspections, you finally find a place that’s just right for you. You do all your homework and compare home loans before settling for a lender that offers the best deal. Finally, it all comes together, you’re in your new home, and soon get used to making mortgage repayments. Mission accomplished.
Then out of the blue, even when the RBA leave the interest rate unchanged, your lender may raise their interest rates just a few points? Eventually, you may see other lenders advertising much lower rates and realise that what you thought was the best interest rate at the time you bought your home isn’t the lowest in the market anymore.
The truth is interest rates change all the time, often without people being aware. Increased interest rates can leave you paying more than you once were.
Fortunately, there is something you can do about it so don’t hold back. The Australian home loan market is highly competitive, so lenders are more likely to offer you discounted rates and better terms to keep you as their customer. The thing to remember is you have to ask first. Think you’re paying too much on your home loan? Here are some things you could do to get a better rate on your home loan:
Research the current home loan interest rates
With interest rates at an all-time low are you still getting the best value from your current lender and home loan? Before you approach your lender, check what other lenders are offering. You can easily find this out from TV ads or compare home loans online. This will tell you quickly whether you’re paying a much higher interest rate.
A reduction of even a few points will make a difference to your loan repayments and save you a lot over the long term. Once you’ve shortlisted loans with cheaper rates, it gives you more bargaining power when you speak to your lender. That will also demonstrate that you have done your research and will hint to your lender that you’re potentially scouting around and they stand to lose a customer.
What are new customers paying?
It’s not surprising to find that you may be paying more for your home loan compared to new customers. Discounted rates and package deals may be offered to attract new customers. You could negotiate similar discounts for being a loyal customer.
Most homeowners are too hesitant to call up their lender and ask for a lower rate and miss out on getting a better deal. Most lenders don’t feel the need to cut the interest rates for customers they already have.
You have nothing to lose enquiring about getting a lower interest rate. When you’ve had a loan for years and have been making repayments on time and built equity into your home, talk to your lender about giving you a better rate, and you may be surprised how keen they are to keep your business.
Switch and save
It’s always a good idea to give your home loan a health check regularly. What you will most likely find is how much you can save with another lender. Taking some effort to refinance your home loan for a better deal could save you thousands in the long run.
It’s usually easier to keep existing customers than to get new ones, so lenders are more likely to help you out than see you go. If you have a good history with that particular lender as well as a good credit score, they are likely to make you a better deal.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for information about the best options for you when it comes to your mortgage.