Dump a bad partner and save
Would your bank wave you goodbye, or grovel to get you back, asks Sophie Elsworth
DUMPING your bank isn’t that dissimilar to dumping a lover.
Two things often happen: they either are happy to see the back of you or they’ll come back grovelling in a desperate bid to win you back.
I’m pleased to say the latter just happened from my bank.
You see, after being told a week earlier by my lender they would under no uncertain terms drop my owner-occupier interest rate (after I phoned them up to say they were ripping me off ), I requested a mortgage discharge form.
I meant business. I wasn’t putting up with that.
It was kind of like a scene from the Bachelor: you think you’re going to be a handed a rose (in this case in the form of a rate cut) only be left emptyhanded and kissed goodbye once and for all.
Sitting on a rate of 3.89 per cent, I was angry when I learned a family member of mine who has a loan with the same lender was on a rate of 3.84 per cent.
She was paying less than me and I wanted the same deal.
When I request this razorsharp rate from the lender’s retention team the lady on the other end of the phone said, “no, we only just gave you a rate drop in June when you phoned up, we can’t give you another one.”
Well what a load of rubbish that was.
This is where you need to pay attention and don’t be fooled by what your bank will tell you.
A few days later I rang a rival institution who offered me a deal of 3.74 per cent with no fees and I was about to make the jump when I thought I’d give my own lender one last try.
I was prepared to seal the deal and dump by lender, this time for good.
No going back.
But I decided
I’d give them one last lifeline.
“I’m about to switch lenders, are you sure there’s nothing else you can do or I’m out of here,’’ I said firmly.
Within a few minutes of being placed on hold my lender came back on the line and they’d changed their tune. “OK, this is what we can do, after getting my manager’s approval – which is very rare – we will drop your rate by 10 basis points, so down to 3.79 per cent,’’ the lady said. “It will take about three to four days to process and we will notify you by mail when it’s done.” Bingo.
That’s all it took: some serious tough talking. While I didn’t get the exact same rate as I was being offered with a rival of 3.74 per cent, it was enough to get me to stick it out and remove the hassle of switching, which would have involved me paying hundreds of dollars in fees and probably outweigh any savings made.
On the average $300,000 30-year loan, a 10-basis point cut results in repayments falling by $17 a month and a total saving of $6164 in interest costs over the life of the loan.
It’s frustrating to hear people complain they are paying a rate with a “4” in front when lenders are eager and desperate to keep you or grab new business.
But the recipe for success is to be prepared to walk away – and make sure you let them know you mean business.