In a recent article published by The Australian, Tim McIntyre’s experience with negotiating a better home loan rate serves as a valuable lesson for many Australian families facing mortgage stress. Despite the Reserve Bank of Australia (RBA) expected to leave rates on hold, there are still opportunities for individuals to save money on their home loans without waiting for a rate cut.
McIntyre’s story begins with the realization that he had been neglecting a smaller investment property loan, which had transitioned from an interest-only period to a standard variable loan. As interest rates began to rise, his repayments increased significantly, prompting him to take action and seek a better deal.
One key takeaway from McIntyre’s experience is the importance of being proactive and not assuming that loyalty to a bank will result in favorable treatment. In fact, banks often reserve their best deals for new customers, leaving long-term clients with higher rates.
To address this disparity, McIntyre decided to contact his bank directly to negotiate a lower interest rate. Before making the call, he did his homework by researching the rates offered by competitors and identifying the discrepancy between his current rate and the rates available to new customers.
During the call, McIntyre used this information to leverage a better deal, ultimately saving himself $60,000 over the life of the loan. By threatening to leave and mentioning the possibility of refinancing with a competitor offering a lower rate, he was able to secure a significant reduction in his interest rate.
One valuable tip shared by Sally Tindall from RateCity is the importance of being prepared to follow through with the threat of leaving if necessary. By demonstrating a willingness to switch lenders, individuals can often prompt their current bank to offer a more competitive rate to retain their business.
In McIntyre’s case, the negotiation process resulted in a 2.98% saving on his repayments, equating to $250 a month, $3,000 a year, and a total of $60,000 over the remaining term of the loan. This substantial saving highlights the impact that proactive action and effective negotiation can have on reducing mortgage stress and improving financial outcomes.
Overall, McIntyre’s experience serves as a powerful reminder that taking the initiative to review and negotiate home loan rates can lead to significant savings in the long run. By being informed, prepared, and willing to explore alternative options, individuals can empower themselves to secure better deals and alleviate financial pressure.