Even if you’re a first-home buyer, you have room to improve the conditions of your current home loan. In this climate, lenders are fiercely competing with each other to offer you great loans. Here are some tactics that can squash the cost of your loan.

How attractive are you?

To seehow much borrowing capacity you really have, take a look at your monthly income after tax and expenses. This should give you an idea of how much any lender is willing to offer you.

 

Who else is playing the field?

Do some research and see what other lenders could offer. Can you spot a better deal? You can amp your bargaining power by showing your current lender that you’ve done your homework.

 

Set up a meeting

A face-to-face meeting with your lender can add pressure to your demands, and clarify what areas are negotiable and what’s off the table.

 

 It’s all about the rate

Asking for a lower interest rate is a must, although it can be tricky if you’re on a fixed-term loan. Remember that a large loan and a clean repayment history will help your case, but be wary of dirt-cheap introductory rates.

 

Ask for lower fees

Lenders tend to be flexible on fees and charges. In your negotiations, don’t accept any new fees and always ask how a proposed fee reduction will cut your overall costs.

 

Avoid LMI

Lenders mortgage insurance (LMI) is a pricey way of protecting your lender, if you can’t repay your loan. Explore cheaper alternatives with your lender, like a Reduced Equity Fee or family guarantee.

 

Check out the specials

Ask your lender what discounts and offers are currently available, and whether these really cut your costs in the long term. Make sure you have written proof from your lender ensuring the discount doesn’t go back to a higher rate later on.

 

Have you been loyal?

If you already do plenty of business with your lending institution in other areas (such as credit cards or home insurance), remind them of it. Since the current demand for loans is soft, customer loyalty is a big deal in this market - so use it to your advantage.

If you’re neither the assertive type nor a market guru, get a broker to help you out. A broker can ask your lender the right questions, have a firm understanding of your situation and help you to achieve your goals.

 

-Stephanie Hanna

 

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