DEAL Or No Deal, Wheel of Fortune, The Price Is Right, and Sale Of The Century – Aussies have had a long love affair with TV game shows. It’s almost as long as our love affair with real estate.
Well, come on down, homebuyers and property investors! It’s time to play Wheel and Deal for the Price of the Century!
The price of your mortgage, that is.
While the Reserve Bank keeps the official interest rate low and steady, perhaps for many more months, lenders have been busy slashing fixed-rate mortgages and being more generous with variable rate loans than they have in years.
Surveys say three-year fixed-rate home loans have dropped by up to 0.8 of a percentage point in recent weeks and many now sit below 5 per cent.
If you don’t want to lock it in, there are also some great variable rate deals available. However, these you will have to ask for.
Variable rates haven’t officially moved for 12 months, but the discounts offered by lenders through package deals and other negotiations have jumped from 0.7 per cent a few years ago to around 1 per cent in many cases today.
If you haven’t reviewed your mortgage for a couple of years, you should be worried about missing out on savings, says Smartline Personal Mortgage Advisors executive director Joe Sirianni.
‘The cost of funds has reduced significantly for the banks in recent times and they are enjoying healthy margins, which gives them room to move when it comes to the rates they offer,’ he says.
‘Competition is at an all-time high and most lenders are more than prepared to sharpen their pencil.’
Sharp pencils mean sharp deals for borrowers, but your bank is not going to willingly cut another 0.2 or 0.3 per cent off your mortgage rate just out of the goodness of its heart. Negotiating an extra 0.3 per cent discount will save you about $50 a month and cut a typical $300,000 mortgage’s overall interest cost by more than $15,000.
The keys to bargaining for a better mortgage rate are:
Know what other rates and offers are available and how your existing loan stacks up. There are plenty of comparison sites and mortgage brokers willing to help you with research.
If you can show your lender that you can get a cheaper rate elsewhere they are more likely to listen.
Be prepared to walk if they don’t come to the party, but have another lender lined up.
When it comes to getting the best price on your mortgage, don’t be the weakest link.