Looking to save money on your home loan? Here are five easy way to do just that!
#1 Do your research
There are many websites out there that show a comparison table on all the rates offered out there. I like using MOZO.
Please note that this should be used as a guide. There are many big banks that do NOT publish their best rates, which could be better than what is listed.
#2 Compare and contrast
You may be getting a better rate, but make sure you know what additional fees are attached with it. Saving 0.01% per year but paying $10 a month or $395 a year may still cost you more in the long run. Many big banks charge $395 per annum for their loan packages which may not be much if you have millions in borrowings but can be a lot for $200-$400k.
Also online and smaller banks tend to offer better rates but lack some features and services that the big banks can offer. Is the extra savings worth the extra effort?
A great way to get a clear picture of how much extra/less you will be paying in the long run is to input your figures into a home loan calculator along with the extra repayments you will be planning to make. I like using Finder.
Speak to your banker or broker about your current rate (or rate being offered) and ask to for either the rate to be lowered or fee to be waived. As an ex bank lender, I know for a fact that you can get a much bigger discount if you simply just show you have done your homework has asked. By doing this you can save hundreds to thousands of dollars per year without having to move banks.
#4 Be prepared to take a better deal elsewhere
Sometimes your particular bank just can't offer you a good enough rate to stay. During times like these, be prepared to take a better deal elsewhere. Many banks offer refinance rebates to help cover costs for moving your loan. I've always believed the best way to give feedback to a business is to take your business elsewhere. It is much more effective than just whinging to customer service or writing bad reviews online.
#5 Develop a strong relationship with your banker/broker
It is very important for you to deal with a lender that understands the importance of giving you the best rate possible. There are many lenders out there that like to preach about how rates are not the most important, service is. This is a load of crap, yes service is important but it is very possible for you to find a lender that will give you the best rate and great service. When I was a lender I always made sure that my best customers always got the best deal I could give them, in turn I got unquestionable loyalty as they trusted that I will always do the right thing for them.
If you find that you always need to go back and forth with a lender to give you a better rate, maybe it is time that you switch to another one.
Also there are different benefits to dealing with a broker or going directly through a banker. I have written a post highlighting the differences on Banker vs Broker.
Aaron Koo is a publisher on Wikibank. He is an ex-Big 4 bank relationship manager and is using his previous experience to provide insider tips to everyday people on how to make better decisions and save money on their personal banking. Connect with Aaron on Facebook, Twitter or Google Plus.