The questions you must ask your bank or mortgage broker to get a better deal
Home loan customers must ask their bank or mortgage broker these tough questions to help get themselves a better deal.
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Mortgage customers should be using the latest rate cut as a prompt to closely review the fees and charges on their loans.
Nearly every lender on the market has declared they would pass on the full 0.25 percentage point cut in full following the Reserve Bank of Australia’s decision to cut the cash rate last week.
This means many deals would fall below the 3 per cent mark and provide customers with never-seen before deals on their debt.
Aussie’s chief executive officer James Symond said he’s never seen competition in the mortgage market “so red hot for good customers”.
“There are lenders who are out there absolutely fighting for business and good customers with a good history and good record,” he said.
Mr Symond said borrowers “have to work out whether the juice is worth the squeeze,” by going through the process of hunting for a cheaper deal.
He said about 30 per cent of loans through their channels were refinances of existing mortgages.
“Call the bank and ask for a better deal and if they won’t give you a better deal, call a broker,” Mr Symond said.
“For good customers with a good history, with the latest rate cuts in mind, the rate should have a two in front for a residential home loan.
“Certainly for a home loan for virtually everyone with investment loans it should have a three in front of it.”
The latest 0.25 percentage point rate cut would save a borrower with a 30-year $500,000 mortgage $70 per month, $2240 a year and about $25,300 over the life of the loan.
MORE NEWS:
Fixed-rate home loan rates are the lowest ever in Australia
What home loan customers must do after the latest rate cut
ANZ’s head of home loans John Campbell said now was definitely a good time to talk to your bank.
“There are banks out there at the moment looking to attract business and cashback is quite pronounced to have customers switch their loans,” he said.
“Ask if you are on a good rate and whether you are set up to make the most of your loan – are you making the most of an offset or redraw account?”
Many banks also offer packaged deals which roll multiple products – such a transaction account, credit card and home loan – into one and provide savings.
But be sure to check that each individual product is right for you, because it often could be better to cherry pick products from multiple banks.
KEY QUESTIONS TO ASK YOUR BANK/BROKER
• How much are the fees and charges?
• What interest rate am I paying?
• Am I on the right loan product?
• If using a broker: how many lenders do you represent?
• What will be the savings if I switch lenders?
• Am I entitled to cashback deals or special offers?
Originally published as The questions you must ask your bank or mortgage broker to get a better deal