November 10, 2010
So you’ve had your savings account with the same financial institution since your primary school days and now you’re in your late twenties and in the market for a home loan. Because you’ve been with the same bank for all of these years, does this mean that they will offer you a better deal for being loyal?
Unfortunately this is not necessarily the case. As far as home loans go your financial institution may not take the length of time you’ve been a customer with them into consideration and may only offer you the going rate. There is a chance that you could haggle your way to a discount but only if you do your homework and compare home loans online to see if there are cheaper deals around. You need to be prepared to go with another lender and show your bank that you’re not happy with their higher price.
Most lenders don’t have special rates for loyal customers, although some offer discounts if you take out a package home loan where a number of products such as your home loan, transaction account and credit card are bundled into the one package with the one lender.
While the advantage of these types of accounts is that you may be offered up to a 0.7 percentage point discount on your home loan rate as well as discounted rates and fees for other products, it may not mean it is the best possible deal available.
For instance, for a $300,000 home loan RateCity compared the comparison rates for the best package home loan rate at 6.63 percent (by Newcastle Permanent) to the lowest variable comparison rate of 6.51 percent (by Carrington National) and found that you could save $6600 over the life of a 25-year term with the Carrington National loan (as at November 5, 2010).
Consider all lenders not only the major four
If your lender isn’t going to reward you for banking with them for all these years, don’t worry as there is a way that you can get a better deal.
For instance RateCity recorded that the benchmark standard variable rate, which is the average of the major four banks (Commonwealth Bank, National Australia Bank, ANZ and Westpac), was 7.49 percent (as at November 5). However the average standard variable of more than 100 lenders was 7.05 percent, which is 33 percentage points less.
At the end of the day, no matter which institution you bank with and how long you have been with them you may be able to get a lower rate just by shopping around and taking the time to compare home loans online.