Is your bank refusing to drop interest rates on your home loan? Here’s how you make it happen
MANY people don’t know it, but one quick phone call to your bank could save you tens of thousands of dollars. Here’s how you make it happen.
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MANY people don’t know one quick phone call to their bank could save them tens of thousands of dollars.
A few minutes on the phone to your bank could easily eclipse savings made across multiple other financial products because home loans are the biggest financial expense for most households.
And experts say it’s as simple as people demanding a better deal or taking their business elsewhere if they don’t get what they want.
Banks are continuing to drop interest rates across all loan products but for the ideal borrower — an owner-occupier customer with a loan-to-value ratio less than 80 per cent who is paying principal and interest — there are deals as low as 3.39 per cent available.
Figures from financial comparison website Mozo found switching from the average packaged variable rate of the big four banks at 4.49 per cent to the lowest variable rate available at 3.39 per cent, could save you nearly $200 a month.
It would reduce monthly repayments from $1518 to $1329.
Mortgage Choice chief executive officer John Flavell said all mortgage customers should be reviewing their loan and ensuring they are not paying too much by making sure they have a rate with a “3” in front.
“As a general rule of thumb, borrowers should check their home loan at least once a year but, with the added complexity in the market, it doesn’t hurt to check it every three months,’’ he said.
“While borrowers can contact their lender directly to negotiate for a better deal, a mortgage broker will do the hard work for them.
“Not only that, they have a broad range of lenders and loans and they know how to negotiate on the customer’s behalf to make sure they’re getting the right deal.”
The Reserve Bank of Australia has kept the cash rate on hold at 1.5 per cent since August 2016 but despite this there’s been constant fluctuations to rate offers.
Realestate.com.au’s head of home loans Andrew Russell said borrowers need to “continually watch the market” and do their research to make sure they are not paying too much.
“You need to go to reputable websites to see where interest rates are and call up your lender and ask them what they are offering customers who are new and compare whether that is similar or better to what you are on,’’ he said.
“Use different channels, whether it’s over the phone or through the branch you may be able to find a better deal with the same lender.
“Go back to your lending provider, they don’t want to lose your custom and they will more than likely come to the party.”
Home Loan Experts’ managing director Otto Dargan urged consumers to put more pressure on their lenders to score competitive deals.
“You can call your bank and quote an offer from a competitor and ask them to put in a pricing request to match it otherwise you’ll leave,’’ he said.
“As a general rule major banks tend to compete only against other major banks, they rarely match a rate from a smaller lender.”
But borrowers need to make sure they have done their research and know what good deals are available before they do pick up the phone and demand a better deal from their financial institution.
HOW I SWITCHED BANKS
Father-of-two Deon Conning was fed up with his bank refusing to drop his rate — so he decided to find a new lender.
The 38-year-old engineer was paying 4.08 per cent on his owner occupier loan with Westpac but after they refused to drop his rate any further he went on the hunt for a cheaper deal.
“Over the years I’ve managed to have a bit of flexibility with the bank and I’ve said to them: ‘We’re going to leave’ and then the rate would come down,’’ he said.
“You lose track of your rate though, the banks are passing on rates sometimes with Reserve Bank changes and then they are not passing them on the next day and it was starting to piss me off.”
Mr Conning said advertising by smaller lender ME caught his attention when his two-year-old son Eli started singing a song that featured on one of the lender’s TV commercials. This was when he noticed they had rates below the four per cent mark.
He’s now paying 3.74 per cent on his loan and said it’s saving him at least $30 per week.
Mr Conning urged others to jump ship, saying: “It’s not that hard.” It took him about one month until the refinancing was complete.