INTEREST

rates have never been lower and despite the fact thousands home owners could save by shifting lenders to get a better deal, most have never even asked for a cheaper rate.

INTEREST rates have never been lower and despite the fact thousands home owners could save by shifting lenders to get a better deal, most have never even asked for a cheaper rate.

While mortgage repayments are often the biggest expense in Australians households, around 65 per cent of us have never asked our lender for a cheaper rate, new research shows.

Yet 82 per cent of those who do demand a better deal get it, according to the finder.com.au survey of 2033 Australians. Around 18 per cent of those surveyed did make the switch to another lender for either a cheaper rate or a mortgage that better suited their needs.

Home owners are in a good position to get a better deal on a mortgage, according to REA Group Chief Economist Nerida Conisbee.

"It is a good idea to negotiate for a better mortgage deal. Owner occupiers are considered one of the safest borrowers for banks and they are therefore more likely to provide a better deal to this group of buyers," she says.

"Interest rates are now the lowest they have ever been and borrowers can do very well getting a deal in this market," she says.

Broker Will Foster from Foster Finance says Australians just aren’t used to haggling.

"I think it’s a cultural thing, I don’t think we’re used to haggling for things in a retail environment. And I think also people are a little bit scared of banks because they are big institutions and they don’t know the terminology to use or how the inside things at the bank operate," he says. "I think it’s just in the too hard basket a lot of the time… when you’re getting a home loan the end goal is not to get a home loan, it’s to get a house. Once it’s done people do tend to set and forget it. They’re just very happy with their house and (they’re) not worried what they’re paying for it," he says.

How hard is it to switch to another loan?

It can be difficult, but this is also where a mortgage broker can help says Foster.

"It can be complicated if you don’t know the system. If you do it yourself through the bank directly it can be complicated because you don’t know what sort of products that bank has outside of the home loan, you don’t know if you can emulate the existing structure you have with your current bank with a new lender.

"But if you do it (switch) through a broker, they will know all of that. They also know the processes and how each bank works in terms of the incoming bank setup and the outgoing bank discharge. To have that process managed just makes it so much easier," he says.

Can you get a better deal?

Banks tend to have tempting offers for new clients and it can’t hurt to ask for these deals to apply to you and your loan.

"Whenever we’re looking at it for a client we’ll always go to the existing lender first to try to negotiate them down to what’s best on the market," he says.

Foster says home owners are more likely to get a better deal with their current lender if they can quote a more competitive rate or mention they are talking to a broker.

Should you lock in rates?

Given the current low-interest rate environment, locking in a lower home loan rate is worth considering, but it will depend on your personal circumstances.

"It’s more to do with how conservative they are and how worried they’ll be if interest rates start moving up. So the closer they are to the top of their borrowing capacity, the more conservative they are and the more likely we are to recommend a fixed rate product for them because that’s going to give them a lot more certainty over their repayments," says Foster.

How often should you shop around?

Foster recommends looking for a better deal once a year and making sure you know what costs you are up for upfront if you do decide to switch to another lender.

"We do annual reviews with our clients and I think annually is fine, I don’t think it needs to be any more regular than that," he says.