After a request for a lower interest rate on his home loan was denied by his bank, Shah went online and connected with a mortgage broker. The broker negotiated a $200 monthly saving from the same bank that rejected him the first time.
“The extra savings on my home loan means a lot for me and my family,” said Shah, whose home loan interest rate was reduced from 4.54% to 4.09%.
“Some of that additional money I am putting back into my home loan so I can pay off the loan sooner…the rest [will go] into a savings account for my son’s higher education.”
Shah used HashChing to connect to his broker. HashChing is an online marketplace that allows consumers to access great home loan deals without having to shop around. The service connects consumers to verified and highly-rated mortgage brokers in their area, saving them time and money in the process.
Mandeep Sodhi, founder and chief executive officer of HashChing, said that on average, borrowers are paying half a percent more by using the big banks rather than brokers and other providers.
A large portion of the major banks’ profits come from borrowers who choose not to refinance their loans to obtain lower rates. Sodhi says negotiated interest rates can be as much as one percent lower than what the banks advertise. “Over the life of the loan, this can save customers tens of thousands of dollars.”
Sodhi said that Shah’s initial attempt at obtaining a lower rate was not successful because he did not know what other lenders were offering.
“The mortgage broker called [Shah’s] bank and threatened to switch [him] to a different lender if they didn’t match the competitor lender offer. [Shah’s] bank realised they would lose one of [their] premium customers if they didn’t match,” Sodhi said. “It literally pays to be persistent.”
Shah advises other borrowers to do their homework before attempting to get a better deal on their mortgages. “You should know what your current rate is, and regularly research online for better rates,” he said. “Speak to your bank or lender, and if you can’t get a better deal from them, then be ready to move to a different provider.”
Collections: Mortgage News