HOMEBUYERS who haggle on their home loan can make significant savings, new findings have revealed.
Finance comparison site Mozo’s annual mystery shop survey found the big four Australian banks were offering discounts of up to 0.82 per cent to people willing to ask for a better deal.
A homebuyer had the potential to save $45,000 on the life of a loan and a refinancer could save up to $86,000.
Even investors were able to save.
“This is a big turnaround from the 2015 mystery shop when no additional discounts were offered to investors,” Mozo property expert Steve Jovcevski said.
“Given APRA’s recent clampdown on interest-only loans allowing no more than 30 per cent of new residential mortgage loans to be interest only, we are surprised to see that banks are offering such competitive rates to potential investors.”
Commonwealth Bank offered the most competitive rates across the board for first-home buyers, refinancers and investors, with the mystery shoppers saying the bank was very keen to give a discount.
For refinancers, a discount of 4.62 per cent reduced to 3.8 per cent was on offer, equating to $2873 in savings each year on a $500,000 loan.
For first-home buyers, a discount of 4.72 per cent down to 4 per cent resulted in a savings of $1527 per year on a $300,000 loan and investors received a discount from 5.54 per cent down to 4.82 per cent, leading to a significant $7200 annual saving on a $1 million loan.
Of the four banks, Westpac was the hardest to negotiate with, only offering discounts upon price matching from other banks.
As well as rate discounts, some banks were offering other generous incentives including cash back and frequent flyer points, which could also be haggled on.
Mozo’s top tips for borrowers are:
– Haggle hard: Do not accept the first discount you are offered by a bank because chances are it’s not the best the provider can do. Instead, ask for the best available discount as providers tend to reserve their biggest discounts for the customers prepared to push hard enough.
-Don’t just haggle on the interest rate: Ask your lender if they can throw in any extras like cash back offers or frequent flyer points.
– Ring around: Research what rates you can get elsewhere as a big four bank is likely to price match if you can tell them you can get a cheaper rate from a competitor.
– Bundle: Consider bringing some of your financial products (ie credit card, super and insurance) over to the bank to secure a larger discount.
– Compare apples with apples: Signing up for the cheapest rate is not always the best option. You should consider other features that will work for you like an offset account, redraw facility or the option of interest-only repayments.
– Call in the experts: If you need a little help haggling a great deal, it might be worth getting an expert to do it on your behalf.