The home loan market in Australia is competitive, so the chances to attain a mortgage on favorable terms and discounted rates are high but you must negotiate strongly. Increasing your negotiating power with the lender can help you attain better mortgage terms. Below are some tips on how to negotiate smartly with your lender.
Research thoroughly
Study the local real estate market to stay on top while negotiating. Speak to local mortgage brokers in Sydney and even view similar house listings to get an idea of property value. Sydney Brokers offer the best mending solutions suitable to your personal needs. Their experienced mortgage brokers have 2400+ home loan products and 20+ lenders, which saves your time and energy.
The home loan landscape is complicated, so it is sensible to learn about why the property is priced high in a specific locality. Proximity to public transport and access to public amenities are a few positive aspects. You can even consider the curb appeal or structural integrity and build a case about assets value.
Even check what interest rates different financial institutions are offering. It will help you to compare and decide as well as strengthen your argument during negotiations.
Determine your affordability to borrow
Your affordability is the amount you can easily pay towards loan installments. You can use an online calculator to identify your borrowing capacity.
Never hesitate to ask
It doesn’t matter if you want minimal ongoing fees or low-interest rates or different features. You need to ask the potential lender without any hesitation. If you hesitate then you will not get it, so ask for a better deal. There is nothing lost. If you get a decrease of 0.5% interest rate then it can lead to considerable cost saving for the remaining loan term.
E.g. if you were to borrow $300,000 at a Standard Variable Rate of 4.43% p.a. and on negotiation, you succeeded to lower the rate to 3.85% then you can save $101 every month or $1,212 annually. The amount you can save for 30 years of loan repayment plan is around $36,360.
Prove your value as a borrower
If you have a great history of dedicated loan repayments and even extra repayments if allowed then you have more strength to negotiate with the lender. Provide your loan statements as concrete proof because you are the kind of customer every lender would be pleased to have.
Example to demonstrate your loyalty
If you are a dedicated customer with a bank then never feel concerned to cash this connection. Other lenders are offering the same loan at a low-interest rate and even other banks are offering competitive rates on similar loan products. You have a strong loan repayment history and are a loyal customer.
Even at first, you attain a non-committal response be calm and provide your reasons for the low-interest rate. Argue compellingly, using points referring to your loyalty for years and strong repayment history. Say you don’t desire to look elsewhere for a better financial solution yet you are willing to go to another lender if your needs are not fulfilled.
Be prepared to switch
Financial institutions want to keep their loyal customers instead of engaging new ones. Therefore be clear about your keenness to make a switch, if necessary. Even be prepared to take action if the negotiation fails and make this clear when you start a negotiation.
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