It's simple really. You just need to ask. I just saved an extra 0.5% off my current investment property loan by calling up the bank and telling them I wanted a better interest rate. Now 0.5 % may not sound like much but on a $500,000 loan it can save you $2,500, not to mention paying less of my money to the mortgage broker who originally set the loan up for me 6 years ago. Why should I still be paying a higher amount of trailing commission to him each month when he has never once called or emailed me in those 6 years to see how things are going?
If you want to save thousands of dollars, here are my simple 3 steps:
- Step 1: Ring around or visit the website of 2 main banks and at least 3 smaller banks or building societies and you will most likely find lower rates being quoted. Write down the exact details because your bank will want you to quote a lower rate from a competitor. You don't need to go and see another lender, just find their published rates. I found Heritage Building Society offering a variable rate of 4.59%. It's probably gone lower since then!
- Step 2: Armed with this, call up your bank and tell them you want a better rate of interest than what they are currently offering you. They will ask you for rates in the market place you have seen and you can quote them your research. Tell them you are shopping around and that you will take ALL your business elsewhere. The bank doesn't want to loose you. They will then refer your matter to a "Loan Retention Division" Every bank has these, a special division setup to do whatever it takes to keep existing customers. Now you really have the upper hand. Tell them you want a phone call back within the next 5 business days to discuss a lower rate and they will log this on the call sheet.
- Step 3: You will get a call in 5 business days, tell them this is what you want. They called me back, confirm my lower rate that took effect at midnight that night and I saved thousands of dollars in interest. The odd thing was that I could have even pushed for a lower rate because the loans officer who called me back practically fell over themselves to keep me happy.
Do this for all your loans. You will never know unless you ask. With interest rates still coming down, now is the time to pay off any property, business, or investment loans ASAP. Get these loans down whilst the interest is low, better still, negotiate a lower rate like I did.