Press releases
Be a proactive mortgage holder - and save.
20/06/2011
Be a proactive mortgage holder – ask for what you want and start saving.
That is the suggestion from Smartline Personal Mortgage Advisers to borrowers who may doubt whether they can cut the cost of their loan repayments.
According to Managing Director, Chris Acret, often borrowers mistakenly believe that all lenders are the same and that there is no scope to reduce loan costs unless you threaten to leave your lender. He says this is far from the truth.
“There is a pervasive view that lenders all offer the same products with the exact same requirements, but there is actually a good deal of difference between the lenders on interest rates, fees and credit policies,” Mr Acret says.
“Borrowers can potentially save thousands of dollars by doing a bit of homework and contacting their lender to, for example, request a reduction in their interest rate.
“If you’ve shopped around and found better deals, you’ve got nothing to lose by contacting your current lender and asking: ‘what can you do for me?’ Or, better still, get your mortgage broker to do all the running around for you.”
Mr Acret uses a recent example of a major lender that was advertising reduced interest rates on the life of the loan for new customers. In many cases Smartline’s mortgage advisers simply contacted the lender on behalf of their clients and were able to secure a reduction on the interest rate for the life of the loans.
Mr Acret says the only thing borrowers needed to be mindful of was ensuring that their “financial house was in order”.
“There is no point in asking the banks for a better deal if you’re always late making loan or credit card repayments for instance,” he said.
“Borrowers have the best chance of success if they have a savings record, are up-to-date with all of their bill payments, and have resisted signing up for any additional debt.
“This is increasingly important as more and more of your repayment history is being recorded on your personal credit file which is carefully scrutinised by lenders.
“If your credit file looks ‘busy’, that in itself can cause declines as lenders’ automated credit scoring systems can class you as a ‘credit junkie’.
“When most lenders assess your ability to repay a mortgage they assume any credit cards will be drawn to their full limit.
“Lenders look at the credit limit on your credit cards as a liability you may have in the future, even if you don’t currently owe a cent.”
Mr Acret said a ‘health check’ with an experienced mortgage adviser who has access to information on loans from multiple lenders could prove very helpful.
“Mortgage brokers have access to a vast array of products and services across a panel of lenders so, unlike lenders, they’re not trying to sell their own products,” he said. “Rather, they’re trying to tailor a solution that suits your unique personal requirements.
“Often, just going to another bank for a better product offering may give you the leverage needed to negotiate with your preferred lender – and a mortgage adviser will do all of the negotiation on your behalf at no cost to you.”
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