Getting a better interest rate is a \u2018no brainer\u2019 way to save thousands on a mortgage<\/a>, but according to new research, half of Australians have never done it.<\/strong><\/p>\n The Reserve Bank of Australia kept the cash rate on hold yet again at 1.5% this month but both fixed and variable rates continue to fluctuate, with economists recommending that now is the ideal time for borrowers to demand a better deal on their home loans<\/a>.<\/span><\/p>\n Yet a survey of 1001 Australians last month by online home loan platform Lendi found just 41% of those with a home loan had ever successfully negotiated a better interest rate with their bank.<\/p>\n Over half of Australians are likely paying more on their home loans than they need to. Picture: Getty<\/p>\n<\/div>\n Lendi co-founder and managing director David Hyman said that leaves more than half stuck with an \u201coff the rack\u201d rate.<\/p>\n \u201cIt\u2019s clear Australians are not confident in their negotiation skills, but by failing to bargain successfully with their banks, they are throwing away thousands of dollars every year,\u201d he said.<\/p>\n \u201cThis is such a wasted opportunity, especially in an environment where living standards are being squeezed by low wage growth and rising costs,\u201d Hyman added.<\/p>\n Finance specialist, John Tindall from Accumulus Home Loans in Sydney, agreed, saying a lower interest rate means more dollars in the pocket. It can translate to tens of thousands over the life of a loan, Tindall said.<\/p>\n \u201cIt\u2019s a no brainer to try to get a better rate. You should always seek to pay as little interest as possible,\u201d he said.<\/p>\n \u201cIf you\u2019re on a rate that is 0.5% higher than it could be, then you\u2019ll pay $52,000 more over the life of the loan, based on a $500,000 loan. That\u2019s the difference between 4% and 4.5%,\u201d he said.<\/p>\n So why are Australians failing to negotiate with their lenders<\/a>? Tindall believed many people simply didn\u2019t know that competing offers were out there. \u201cAnd understandably, their current lender won\u2019t tell them!\u201d<\/p>\n He said there was still time to act, though. \u201cWe are starting to see interest rates for some fixed rate loans start to move up and this can be a sign that the financial markets are expecting interest rates to be higher in coming years,\u201d Tindall said.<\/p>\n \u201cThis is a sensible time to review your loans and potentially lock in some historically-low interest rates before they start rising in earnest,\u201d he added.<\/p>\n Hyman said the survey also demonstrated that Australians are anticipating a rate rise this year.<\/p>\n \u201cThere is a lot they can do to soften the blow. They just need to realise their bargaining power and sharpen their negotiation skills,\u201d said Hyman.<\/p>\n \u201cBefore going to your bank to ask for a better rate, it\u2019s important to do your research and have your information in order.<\/p>\n \u201cGenerally, if you have a loan to valuation ratio (LVR) of less than 80% you\u2019ll be in a good position to haggle.\u201d<\/p>\n If you have a loan to valuation ratio of less than 80%, you\u2019ll be in a good position to haggle a better rate. Picture: realestate.com.au\/buy<\/p>\n<\/div>\n Hyman said the first step is understanding what interest rate and fees are being charged.<\/p>\n \u201cThen, look at your LVR and your remaining loan term. Use that information to check out what is on offer<\/a> from your current lender and their competitors. This will give you a realistic insight into what you can ask for,\u201d he added.<\/p>\n Tindall said a mortgage broker can also help review several lenders and present alternative options.<\/p>\n \u201cBear in mind switching costs, such as discharge fees and break fees, can add up to about $1500, so seek this as a minimum benefit.\u201d<\/p>\n
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