Banks would be willing to drop home loan interest rates for customers if they bothered to ask according to Aussie founder and Chairman John Symond.
He says mortgage holders could save thousands of dollars if they took the time to do a simple mortgage health check and ask their lender for a discount on their standard variable rate.
“Mortgage brokers have access to hundreds of loans and can compare them quickly so borrowers can get a free and objective view of what’s available.
“Then, if they feel any loyalty to their current lender, they can ask them to better the cheaper rate. Two out of three times they will drop the rate, as simple as that. Though why a borrower would want to stay loyal to a lender who wasn't doing the best by them is another question entirely,” he says.
Symond also believes that there’s no real need to fix mortgage rates at present, when variable rates are on par cost-wise and offer much more flexibility. The average standard variable rate is about 6.76 per cent with the major banks, and borrowers should be able to negotiate a discounted variable rate of around 5.8 per cent.
“If you are already enjoying rates around the 5.7 to 5.8 per cent, there’s no real benefit in fixing in an interest rate for when interest rates are likely to fall further,” he says.
“With a fixed rate, you no longer get the bonus of a redraw facility, and you can’t increase the payment amounts. You become very locked in. If you have a compelling reason to give yourself a tight budget, like a new baby coming, then go ahead and fix half of it, but a variable rate really does give you more flexibility in the long run.”
“It really doesn’t take much to give a broker a call, and the saving on an average $300,000 mortgage over 30 years between 6.76 per cent and a possible 5.8 per cent is around $187.00 per month. If you keep paying that money on your mortgage, it could take more than six years’ off your loan and save thousands over the life of the loan, so it is definitely worth seeing a broker about a mortgage health check.”