Westwood Conveyancing

What is the No.1 question that could save you tens of thousands of dollars on your loan repayments?

Almost half of homeowners fail to ask for a better interest rate on mortgage 

Almost half of Australian homeowners taking out mortgages are failing to ask “the No.1 question” that could save tens of thousands of dollars on their loan repayments. 

In NSW, an average owner-occupier mortgage is $433,800, with interest at the standard 4.73 per cent. With a 0.2 per cent discount it could potentially save a homeowner $52 a month or more than $18,698 over a 30-year loan.

Yet about 45 per cent of homeowners are not requesting a lower interest rate when applying for a loan, a survey conducted by finder.com.au has found.

Almost half of Australian home-owners are not negotiating for a lower interest rate when they take out a loan.

Of almost 1300 homeowners with a mortgage that were surveyed last month, 9 per cent didn’t know they could ask for a discount, while a further 36 per cent simply did not bother to ask. 

That’s despite a good chance it could lead to additional savings. Discounts are given to more than 75 per cent of people who asked, Finder money expert Bessie Hassan said.

“For a lot of people it’s a very daunting conversation to have, as there’s that chance of rejection,” Ms Hassan said.  “But if you don’t ask, you won’t get it, so it’s worth asking as you could save tens of thousands of dollars.”

Encouraging signs of growth are emerging from the local housing market. Photo: Rob Homer

click to enlarge

“It’s not uncommon for lenders to be discounting rates by 0.2 to 0.25 per cent,” she said. “Right now, unless your mortgage interest rate has a three in front of it, you could probably be getting a better deal,”

“If you managed to score a 0.5 per cent discount, you’d pocket $129 a month or $46,339 over a 30-year loan,” Ms Hassan said.

More than 50 per cent of home loans in a Australia are purchased through a mortgage broker.

Of the surveyed mortgage borrowers, a third said they had been successful in negotiating a lower interest rate. Another 10 per cent tried and failed, while 12 per cent were offered a discount right off the bat.

Men were more likely than women to have asked for and received a lower rate, while Generation X was the most discount-savvy, followed by Generation Y, then Baby Boomers.

West Australians were the most likely to get a discount after asking, while Tasmanians were the least.

Ms Hassan said the larger the loan the more likely the chance of a discount, as banks wanted to keep such customers on board.

“It costs banks a lot more to lose you as a customer, than to give you a discount,” she said. 

“It can also help if you’ve got other products with them, like credit cards and savings accounts, show you’re a valued customer and leverage your loyalty.”

While Australians can be bargain hunters when it comes to other services, they often put reviewing their mortgage in the ‘too hard’ basket.

“People will go change their phone bills to save $10 a month, and shop around for car insurance, but when it comes to our biggest expense, the mortgage, people often don’t change it even though you could save thousands and thousands of dollars.”

“The banks are never going to ring you up and say you can pay me less now, we can drop your interest rate, you have to ask” .

Australian homeowners too often take a “set and forget” approach to their mortgages.

“Getting a mortgage can be confusing, complex and quite stressful, so once a lot of people get one they just think I’ll leave that until I’m selling”.

“[But] on average you want to be looking at revisiting your home loan at least once a year, if not more. Interest rates are low and banks are competing for your dollar.” 

Those who find a better rate, should flag it with their existing lender, to see if they could match it.

First-home buyers are generally at a disadvantage when it comes to such negotiations, First Home Buyers Australia director and co-founder Taj Singh said.

“Clients with larger deposits know they can get better rates,” he said. “But a lot of first-home buyers are getting in with skinny deposits [of 5 to 10 per cent] and they’re biggest concern is just getting into the market … they understand they can’t be fussy.”

While there is still scope for them to ask for a discount, Mr Singh noted because first-home buyers generally couldn’t afford large loans, they got less of a discount. 

“Banks tend to discount if your loan is over a certain amount, if it’s over $400,000 you might get one level, if it’s over $1 million, you might get a higher level … they’re definitely disadvantaged given the higher discounts are for higher loans.”

Please phone our office today if you haven't revisited your mortgage in the last 12 months

Source  :  https://www.domain.com.au/news/almost-half-of-homeowners-fail-to-ask-for-a-better-interest-rate-on-mortgage-20171124-gzqgvl/?utm_source=email&utm_campaign=Insider_27112017_Pixel&utm_medium=email&utm_content=none

© Copyright Biz-e-News