Nearly two out of three Australians have never asked their lender for a better rate on their home loan according to new research, and are missing out on the potential savings as a result.
The research was conducted by finder.com.au and asked over 2000 Australians whether they had ever asked their lender for a better mortgage rate.
Interestingly, the one third of respondents that did had a healthy success rate of getting a better rate. Over 80 per cent of those in fact that did approach for a lower rate got a lower rate.
Borrowers who might stay quiet and miss out on being one of that 80 per cent that have success negotiating a better interest rate could be losing out on thousands of dollars worth of savings.
Money expert at finder.com.au Bessie Hassan gave a picture of what sort of savings could be had when she spoke to The Adviser.
“A 0.25 per cent discount off the standard variable rate to 4.68 per cent could pocket you $653 per year, or $19,594.87 over the life of your loan,” she said.
“Simply put, the savings are extensive.”
Ms Hassan encouraged borrowers to push through the discomfort of trying to haggle for a better deal because the potential financial rewards were worth it.
Interestingly, the findings revealed that the younger end of the borrowing market were more likely to actually ask for a better rate, but it was the older borrowers that were more likely to be successful in actually getting one.
Similarly, while men were more often the ones asking for a better deal, it was women that actually had a better success rate in securing one.
“Mortgage repayments are the single biggest monthly expense for most households and those saved dollars are much better off in your back pocket,” Ms Hassan told The Adviser.
“Although we are in a historically low rate market, it’s vital that mortgage holders regularly review their loans and approach their bank, using loyalty, loan size or market competitiveness as leverage.”
Ms Hassan gave four great tips on negotiating a lower mortgage rate:
Identify the rate – check your rate and compare it to other rates on offer in the market. Use this as leverage if they are lower rates going around.
Build a case – retrieve account information such as payment history and customer start date. Proving loyalty and a good payment record increases your chances of success.
Shop around – research online and contact other lenders to compare rates and fees.
Approach the lender – approach your lender and explain why you deserve a better rate and that you’ve found better deals elsewhere in the mortgage lending market.