Haggling power revealed: How to save $45k on a home loan just by asking for it
Scoring a lower rate on your home loan may be as easy as asking for it, with the big banks willing to offer discounts of up to 0.82% to those willing to haggle, Mozo’s annual home loan mystery shop has revealed.
Mozo’s haggling experiment found that all four big banks were willing to lower their home loan rates for borrowers who asked for a discount, though some were more willing to negotiate than others and the size of the discount differed between types of borrower.
For example, first home buyers were able to snag a discount of up to 0.72%, down to a neat 4.00%, saving $1,527 per year on a $300,000 home loan - or $45,000 over the life of a 30 year loan. Investors could also secure up to a 0.72% discount, down to 4.82%, saving them a massive $7,200 a year on a $1 million loan - enough to get them into some of the tough property hotspots around at the moment.
Refinancers could score an even bigger discount of 0.82%, down to low rate of 3.80%, saving them $2,873 a year on a $500,000 loan.
Mozo home loan haggling results 2017
“It just goes to show that there’s never any harm in asking - in fact, something as simple as asking for a better deal could wind up saving you thousands of dollars,” said Mozo property expert Steve Jovcevski.
“Research shows that people are more likely to haggle on a fridge or a TV than on their home loan. That doesn’t make any sense, considering that a home loan is such a big cost, and you’re usually dealing with it for the next 25 to 30 years of your life.”
The biggest rate cuts for any type of haggler came from the Commonwealth Bank, which according to Mozo’s Mystery Shoppers, was “very keen” to give out discounts. On the other hand, Westpac was less enthused about knocking down their rates, only offering discounts when price matching offers from other banks.
“The lesson there is to come prepared,” said Jovcevski. “Make sure you compare rates from other lenders before you start haggling because that way you can ask your chosen bank to price match, plus, you’ll have an idea of what’s a realistic goal to shoot for.”
Mozo’s top haggling tips
- Never accept the first offer. Chances are, the first discount offered by a bank is still not the best deal they can do. Banks tend to reserve their best rates for customers who are willing to push, so don’t stop haggling too early, or you’ll miss out on the best savings.
- Ask for other incentives. It’s not all about the interest rate. Other offers like frequent flyer points, cashback offers or waived fees can also sweeten the home loan deal, so be sure to ask about those as well.
- Compare like for like. Make sure that if you’re comparing home loans, you’re looking at similar offers. A mortgage with an offset account will likely have a slightly higher rate, but could still save you more in the long run if you use it correctly. Be sure you’re comparing products on equal footing.
- Bundle products. A bank might be more willing to give you a whopping discount on your home loan if you bring your other banking products over to them as well. Think about bundling your credit cards, car insurance or home insurance with your mortgage to ensure a better deal.
- Get expert assistance. Not a natural haggler? You might prefer to call in the experts and have them negotiate a deal on your behalf. Through Mozo’s free home loan negotiation service, Steve Jovcevski can help you talk your way to a better deal. Just head over here to drop us a line.
Ready to start haggling on your home loan? Why not start by comparing home loan rates and seeing what kind of offers are available at the moment, or, check out our handy step-by-step guide to how to haggle on your home loan.