How I slashed 1.25% off a Big 4 home loan by haggling

How I slashed 1.25% off a Big 4 home loan by haggling

2015 has been an interesting year for the home loan world. Earlier in the year, major lenders increased rates for investors, whilst introducing great deals to owner occupiers in a bid to meet APRA’s requirements of reducing their investor loan books to under 10% growth each year.

Now more recently, major banks Westpac, CommBank, NAB, ANZ, St.George and Macquarie Bank have announced they will lift rates for both investors and owner occupiers to meet another regulation by APRA that requires banks to increase their capital by 1 July 2016 and other majors are tipped to follow suit and hike up rates as well.

While it might sound a bit doom and gloom, the good news is there are still great savings to be found, whether you’re a first home buyer, investor or refinancer, all you have to be is savvy enough to put on your negotiating hat.

To show you how much you could potentially slash off your Big 4 home loan rate, I spent the week on the phones with the big banks. My mission was to beat my previous record last year when I went undercover and was able to haggle up to 1.16% off a big 4 home loan.

And I’m happy to report the big banks are more willing than ever to offer discounts, as I was able to slash up to 1.25% off a Big 4 home loan. It’s important to note, I did make these calls before the majors started hiking rates.

Here’s a closer look at the discounts I received:

ANZ

Borrower Standard Variable Rate Package Discount Rate Mystery Shop Rate Total discount
First Home Buyer $300K, 90% LVR 5.38% 4.63%           4.44%                   0.94%
Refinancer $500K, <80% LVR 5.38% 4.48%      4.38%       1.00%
Investor $1M, <80% LVR 5.65% 4.75%       4.75%       0.90%

Commonwealth Bank

Borrower Standard Variable Rate Package Discount Rate Mystery Shop Rate Total discount
First Home Buyer $300K, 90% LVR 5.45% 4.95%      4.40%         1.05% discount
Refinancer $500K, <80% LVR 5.45% 4.85%    4.20%           1.25%
Investor $1M, <80% LVR 5.72% 4.72%    4.45%           1.27% discount

NAB

Borrower Standard Variable Rate Package Discount Rate Mystery Shop Rate Total discount
First Home Buyer $300K, 90% LVR 5.43% 4.58% 4.36%    1.07%
Refinancer $500K, <80% LVR 5.43% 4.58% 4.30%    1.13%
Investor $1M, <80% LVR 5.43% 4.53% 4.53%     0.90%

Westpac

Borrower Standard Variable Rate Package Rate Mystery Shop Rate Total discount
First Home Buyer $300K, 90% LVR 5.48% 4.58%    4.45%         1.03%
Refinancer $500K, <80% LVR 5.48% 4.58%    4.58%         0.90%
Investor $1M, <80% LVR 5.75% 4.75%      4.75%         1.00%

While the tables show some great discounts, there is more to negotiating than just picking up the phone and making a call, it also takes some thrifty haggling tactics to really bring down the rate. Here are my top haggling tips:

  1. Call more than one big bank. Usually big banks will only price match if you’ve received a lower interest rate price from a competitor bank. So if you can tell the big bank you’re looking at taking the loan out with, you spoke to another major and were offered a better rate they will be more likely to match.
  2. Be persistent. When I conducted my haggling experiment the first rate I was offered was often not the best. So if you find the sales person you are speaking to won’t give you a discount, ask to speak to someone more senior like their manager. And remember often they’ll ask you to do an application but be persistent and don’t take no for an answer, because often they’ll relent and be upfront about their best rate.
  3. Ask for cash incentives. The interest rate isn’t the only thing you can haggle on. You can also ask them if they have any freebie offers like cash back or frequent flyer points they can throw into the mix. Big banks are especially happy to do this if you’re refinancing, as a means of outweighing the cost of switching.
  4. Bundle. You could potentially receive a bigger discount if you’re willing to bring some of your (or your family member’s) financial products over to the bank, like term deposits, super, credit cards and life insurance.
  5. Compare apples with apples. Don’t just sign up with the best deal, as you should also check that the home loan has the features that will work for you like an offset account or your choice of making interest only repayments for the first few years, if this is something you are after.

If you need a little help haggling a great deal you can fill in your details below or give me a call on 13 6696 (MOZO) and I’ll negotiate with some of the major players on your behalf.

How I slashed 1.25% off a Big 4 home loan by haggling was last modified: February 12, 2016 by Steve Jovcevski

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