Then consider yourself lucky!
Whether it’s a loan on your own home or an investment, right now Australians are paying the lowest interest rates on record.
However, we’re not all enjoying the benefits of these rock-bottom rates.
Some of us are paying well over the odds, which, in a competitive mortgage market, is a massive missed opportunity.
Here’s what you need to keep in mind: even a rate cut of just 0.5% can slash thousands of dollars off your mortgage, freeing up cash for much-needed renovations, or enabling you to pay down your loans much sooner by making extra repayments.
On a $400,000 loan, a 0.5% rate cut could save you $113 per month, and $33,779 over a 25-year mortgage.
Nothing to be sneezed at, right?
In a highly competitive home loan market, you have the power to negotiate a better rate – and if one bank doesn’t want your money, another certainly will!
Here are the five steps to negotiate a better interest rate on your mortgage, so you can start saving money today:
Step 1: Ask what your bank is offering new customers
Lenders often run promotions to lure in new customers, with rates or bonuses that significantly lower than those being paid by their existing borrowers.
Don’t be afraid to call your bank and ask why, as a valued, long-term customer, you aren’t being offered the same rock-bottom rate as a newbie.
If you’ve made your repayments on time, have multiple investment loans with the same lender, or you have referred friends and family their way, remind them of this.
Explain that you could snap up a great rate by refinancing with another lender, and see what they say.
If they offer you a better deal on the spot, fantastic! You’ve saved a tonne of time researching and ringing around other lenders.
If not, ask to speak to their customer retention team; you’ll find they suddenly pay attention at the prospect of you leaving.
If they still don’t come to the party, move on to step two, with the option to recommence negotiations with your current bank down the track.
Step 2: Research competitor’s rates
What interest rates are other institutions offering at the moment?
Comparison sites can be helpful, as they’ll give you a snapshot of what’s on offer across a panel of lenders, saving you some time.
But if you’re serious about finding the absolute best deal, don’t just look at the rate they advertise on their TV commercials or on their website – give them a call and ask them what rate they could offer you personally, if you were to refinance with them.
Step 3: Chat to a broker
Love the idea of step two, but you don’t have the time to put in all of that effort yourself?
An experienced finance broker will know which lenders have the best offers at the moment, and which of these products best suit your circumstances.
They sometimes have access to loan types and rates that aren’t advertised to the general public, too – so you could save even more.
Step 4: Be prepared to make good on your threats
Banker not playing ball?
Won’t budge even 0.02%, despite your insistence that you’ll take your business elsewhere?
It may be a hassle to switch lenders, but think of the thousands of dollars you could save over the next decade or two by biting the bullet and refinancing.
Step 5: Don’t set and forget
You’ve scored yourself a better rate and are happy with your current loan situation – but don’t become complacent and fall into the “set and forget” trap.
Keep your eye on the mortgage promotions being advertised with all lenders, and make a note in your diary to revisit these steps every 12 months.
Remember that as your personal circumstances change – scoring a big pay rise, or dependants moving out of home – you may find your power to negotiate is strengthened.
So, make the most of these opportunities to further improve your interest rate and loan features.
Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.