Mortgage lenders have kick-started an aggressive incentive war in a bid to lure new borrowers, including offering free cash to switch and to price match on interest rates. But Australia’s leading financial comparison website RateCity (www.ratecity.com.au), has warned borrowers that rates are more important than a discount or deal.
Alex Parsons, CEO of RateCity, has urged people to be smart and take into account more than a discount when shopping for a home loan.
“Cash back incentives and other deals can be a great bonus for borrowers, but it’s critical that borrowers look at a wide range of home loans and check comparison rates and features to make sure the deal is the best option for them long term,” he said.
“Taking out a home loan is one of the longest-term financial commitments that you’ll make and so the deal should be the icing on the cake, not the reason to get a product.
“Most borrowers will be better off shopping around for a home loan with a low ongoing interest rate, low fees and the features that suit them, rather than taking up a special deal like a cashback.”
Parsons said that aside from advertised incentives and deals, most lenders will negotiate on rates with new and existing customers, “If you’re paying more than 5 percent on a home loan it’s time to ask for a better deal or consider refinancing into a lower rate.”