I just called to say . . . give me some love

DO you remember the last time your bank called out of the blue and said “great news, we’re giving you a cheaper interest rate on your mortgage because you’re just so darn loyal!”? No? Neither do I. Banks don’t give money away if they don’t have to. And they view your loyalty as laziness. You are not a flight risk, you pay their rates without question, so why change the good thing they’ve got going on?

Their best deals are for luring new customers. So, if you want to save, you’ve got to jump ship to a new lender, right?

That means all that admin work getting your loan application together, filling out forms, providing spending estimates and explaining the odd splurge on your transaction record … and then doing it all over again every year or two just to be getting somewhere near the best deal?

Not necessarily. Banks want new customers, but they also want to hang onto their existing business.

And while my bank didn’t call me, my mortgage broker did. As part of his annual client review, he secured me a better interest rate with my lender.

Mortgage Choice’s James Algar said brokers saved thousands each year for customers by calling existing lenders to negotiate better deals.

“Banks make substantial margins on home loans and unless you push back they’ll be happy to let you keep paying more,” Mr Algar said. “If you’re on a rubbish rate with your bank, that’s why they can afford to give a better deal to a new customer.”

Some people who are worried about rising interest rates have unknowingly been paying more interest than they needed to for years.

While a phone call now could offset multiple future rate rises, going forward, borrowers should review their situation every 12 months.

“We had a client who was paying 3.19 per cent and wasn’t in a position to refinance. In one phone call we got that down to 2.5 per cent, which will save him at least $10,000 a year,” Mr Algar said.

Mortgage Choice brokers all over Australia have similar stories.

In Oakleigh, Victoria, Marvin Coleman had a client paying 3.19 per cent on a $740,000 loan balance. He negotiated a new rate of 2.24 per cent, saving $6900 a year.

In Sydney, Nathan Newham and Ryan Ewart had a new customer who had not reviewed her home loan in many years and was paying 4.25 per cent. A negotiation with her lender brought the figure to 2.79 per cent for a more than $3000 a year saving.

And then there was the case of Deslie Taylor in Ormeau, Queensland.

Deslie’s client was paying 2.79 per cent and had the option to refinance with a new lender at 2.29 per cent plus a $3000 cash back payment.

The client’s current lender refused to match the new deal, so Deslie submitted a discharge form on behalf of her client.

Once the existing lender received the discharge, they called the client and offered to match the rate and cash back. The lender had one little “deal of no return” hidden up their sleeve.

All these examples prove that more often than not your lender has a better deal in reserve, and knowing how to force their hand can take thousands of dollars out of the bank’s pockets and put them back in yours. Tim McIntyre is News Corp network real estate content director and a homeowner who’s paying less for his mortgage.