Many home loan holders often don’t review their mortgage. But financial experts suggest that to get the most competitive deal then you should be reviewing your mortgage at least every 2-years. Also if you’re seeking to take out a home loan then negotiate a better deal right from the start, rather than accepting the advertised rate.
How to Get a Better Mortgage Deal
Getting a better mortgage deal isn’t as hard as it sounds. The Reserve Bank of Australia (RBA) is keeping the official cash rate low and this is the rate that lenders borrow money at to finance home loans. Therefore, lenders are being more generous with their variable and fixed loan rates, and many home loan rates are now the lowest that they’ve ever been.
In fact, according to recent surveys, 3-year fixed rate home loans have fallen by 0.8 of a percent. This has reduced many home loan rates to 5 percent and below.
Review Your Mortgage
Financial experts are urging home loan holders to review their mortgage if they’ve had the same home loan for years. Why? Well It is suspected that many mortgage holders are paying too much and could be making a better saving. This typically occurs for two reasons. These being as follows:
Rate reductions are not fully passed on – As the cost of home loan funds have been reduced significantly over the last 2-years some lenders are now enjoying healthy margins. This is attributed to the fact that they have passed on marginal rate reductions to their borrowers. This means that you, as a borrower, have more room for negotiation.
Borrowers are not negotiating a better rate – Competition between lenders to gain your business is increasing. This means that most lenders are prepared to sharpen their pencil and offer borrowers, who ask, better rates.
How Much Can You Save?
The sharper a lender’s pencil is, the better the mortgage deal for borrowers. But you need to ask for a better deal, as most lenders won’t automatically cut another 0.2 or 0.3 percent of a percent off your mortgage without some encouragement.
If you reduce your mortgage by 0.3 of a percent, this can save you approximately $50.00 per month on an average $300,000 mortgage. This, in turn, will reduce the interest you pay back over the term of your loan by $15,000.00.
So How Can You Negotiate a Better Deal?
Know what is available on the market in terms of interest rates and features, as well as offers. Visit comparison sites or a mortgage broker and research, the market. You can then use this information to your benefit when negotiating.
If your lender refuses to negotiate, then don’t be afraid to take your business elsewhere. There are thousands of home loan products available and hundreds of lenders who all want your business, so shop around.
Do you want to get a better mortgage rate? Then contact eChoice and negotiate today.
Written by eChoice