Seemingly, the only thing more boring than mortgage talk is insurance talk. Despite this, sometimes renegotiating your mortgage is necessary, especially if your current deal is ripping you off.
As life goes on circumstances change, and if you refuse to look at giving your mortgage an update, you could be missing out on a better – money saving – mortgage deal. Lower interest rates, a higher income, new job or just the fact you’ve paid off a lot of your current loan could all earn you a better home loan.
Although it might seem daunting, renegotiating your mortgage is not hard. Like most things, it’s just a matter of knowing what to do, so to help you out we’ve compiled a list of tips to help you renegotiate your mortgage with confidence.
Be clear on what you want before renegotiating
When you first sit down with your lender to renegotiate your mortgage, it’s important to have a clear idea of what you’re trying to gain, otherwise you might walk out with a deal that doesn’t reflect your interests.
What are your goals for the renegotiation? Are you looking to decrease your monthly repayments? Lower your interest rate? Or are you just looking to add features to your account, such as access to redraw facilities?
It’s also important to be able to tell the lender why you want these things. Are you saving for a renovation? Looking at investment in the future? Or do you just know that you could get a cheaper deal elsewhere? Clue the lender in and you’re likely to have more success.
Know the competition‘s mortgage deals
No matter how many debate championships you’ve won, if you’re campaigning for an impossible deal, chances are your lender is going to say no. Likewise, if you’re not asking for enough, you could also be letting yourself down.
For this reason, it’s important to know the competition. What kind of deals would you be eligible for if you moved elsewhere, instead of renegotiating? Compare other lenders’ mortgage rates and products with your own. Look at their interest rates, fees and charges and print them out to take to your meeting.
While research might be tedious, being more informed increases the likelihood that you could walk out with a better deal – or at the very least, if your lender says no, you’ll know where to go next.
Work out the cost of moving lenders VS staying put
Seriously consider the costs of refinancing your mortgage with another lender – and add them up! If your current lender can’t offer you what you want and someone else can, how much is going to cost you to move? Are there break fees? Any closing fees? Would you need to re-pay lenders mortgage insurance? Whether or not the cost is worth it, once you know where you sit you will be able to better negotiate with your current lender.
All lenders are different, and all lenders are going to have different capacities as to what deals they can offer when renegotiating. If you’re with a smaller lender, they might not have the same backing behind them to offer a better, more risky deal than a bigger lender might have. At the same time, if you’re self-employed or there is something ‘non-standard’ about your application, there might be a limited number of lenders with the flexibility to offer what you’re asking for.
By all means, ask for what you want but understand that despite your best efforts, a renegotiation with your current lender might not always be possible.
Words by Kathryn Lee
Want a better mortgage deal? Refinancing might be an option. Contact eChoice and we’ll put you in touch with one of our friendly mortgage brokers who will be able to help guide you through your options and find you a better deal.