Unfortunately banks are great at rewarding new customers with great discounts and special offers but often neglect to reward existing loyal customers. Therefore, it is up to you to make sure you are continuously getting the best rate possible on your home loan or investment property loan!
At Rise High, we love making the lives of our clients easier by regularly conducting proactive loan reviews on your behalf for the lifetime of your loan. This ensures your rate remains competitive.
However, if you are currently with another lender and are keen to know how YOU can negotiate a better interest rate on your own, here are 5 steps that can help you out! If at any point you feel overwhelmed or full of questions about the process, do not panic! We would love to hear from you and are always happy to help!
Step 1 – Know your loan and your interest rate!
Specially make sure you know:
- Your interest rate;
- Whether your loan is fixed or variable;
- Whether your repayments are Interest Only (IO) or Principal & Interest (P&I); and
- Are you paying owner occupier interest rates or investment interest rates.
Once you know exactly what loan product you have and what it is costing, you can start exploring whether making some slight changes to your existing loan would automatically help to reduce your interest rate. For example, if you are currently making IO repayments you might like be eligible for an automatic interest rate discount by simply converting the loan to P&I. If your loan is variable you may also find savings by simply fixing the interest rate to a lower interest rate.
Also consider the features you are currently paying for and whether these features are really adding value to you. For example, an offset account is a fantastic feature if you use it well but if you find that you hardly ever have any savings in your offset account perhaps you are better switching to a more basic product that has a lower interest rate. Only pay for the features you need!
Step 2 – Research Competitor offers and compare them to your current loan
The best and most efficient way to do this is to engage the services of an experienced and professional Independent Mortgage Broker who has access to a large panel of lenders and can provide you with an indication if your current rate is competitive and what other opportunities might exist for you to save money.
Step 3 – Speak to your banks retention team!
Once you are armed with the knowledge of how much you could potentially save and what competitors are offering it is time to contact your bank and speak to their retention team to proactively ask them to reduce your interest rate. This is either something you can do yourself or you can once again ask your Rise High mortgage broker to do this on your behalf. Often your Rise High mortgage broker will be able to get a better response and outcome for you as they have better negotiating power with the banks. The best results often come when the bank is afraid of loosing you as a client so the threat of refinancing away from your current bank has to be believable.
Step 4 – Consider refinancing
If your bank will not come to the party, you need to be prepared to consider refinancing. Whilst it can seem like hard work, a 0.5% reduction in your home loan rate could save you approx. $2,000 per year on a $400K loan so it is definitely worth doing. After all, this money is better in your pocket than the banks’!
Similarly, if you currently have multiple debts or loans, thinking about rolling them into one through a debt consolidation loan can also help decrease the amount of interest you are paying overall.
If you are dealing with one of our dedicated Rise High mortgage brokers, they will make the process easy and take all the hard work out of the process. Learn more about how we can help you to refinance by clicking here.
Step 5 – Get a great mortgage broker!
Once you have sorted out your home loan and are enjoying your new savings, you need to ensure you don’t rest on your laurels. You should be going through this review process at least every 24 months to ensure that your home loan and investment loans remain competitively priced. A great Mortgage Broker will proactively do these ongoing home loan reviews for you at no charge to you, so this is definitely something to look for when selecting the right Mortgage Broker to support you.
Ultimately if you are time poor and/or don’t like asking for discounts, the best thing you can do for your bank balance is to work with a great mortgage broker who will not only conduct a free review of your loan but will also take all of the hassle out of any steps required to negotiate a better interest rate for you. This would lead to you saving money sooner!
If you want to know more about your options please leave your details below and we will be in touch.