Compare loans to save yourself thousands of dollars

What the economy says about rates

ECONOMICS editor Jessica Irvine explains how you can knock thousands of dollars off your home loan with a phone call.

For all our bravado Australians are, by and large, a shy and retiring lot. We wait in lines, give seats to elderly people on public transport and stare daggers at anyone who jumps the queue.

When it comes to making purchases, we cringe at the idea of having to haggle or ask for a discount - and it’s costing us tens of thousands of dollars in excess interest payments.

All you need to do is ask. Don’t have the confidence? Fear not, let me show you how it’s done.

I want you to ring your bank on Monday morning. Your conversation should go something like this ...

‘Hello, I have been a customer with your institution for X many years. I’m currently paying an interest rate of X per cent. I am ringing because I would like a better deal than that. I know for a fact that I can get a loan from loans.com.au for 4.54 per cent. Failing that, both resi and UBank have variable rate loans for 4.62 per cent. Can you please explain why I am paying so much more?” Your bank representative may interject here about their excellent customer service and the peace of mind of banking with a large reputable institution.

‘I’m not concerned about that,” you reply. ‘I’m prepared to go with whoever can give me the best deal. What can you offer me?” At this point, you may hear a flurry of keystrokes as they look up your details and offer to waive some of your fees.

‘Yes I’d like you to waive those fees,” you reply. ‘But I’m still not satisfied. I am a good customer - I make my repayments and I have other products with you. I don’t want to switch to a new lender but I know I could save tens of thousands of dollars over the life of my loan by doing so. I’m serious about sorting this out. Perhaps you can talk to your manager to see what discount you can offer me?” Cue more keystrokes and a ‘hold please” before they come back to you with an offer.

‘That’s nice,” you say, ‘but I want a -4’ in front. If you’re not prepared to offer me something with a 4 in front, I’m going to walk. Check with your manager again.” And that’s it: You’re done.

I can’t guarantee it will work for everyone but most reliable borrowers should be able to knock off at least a few basis points.If you owe $300,000, for every 25 basis points you shave off your mortgage rate, you’ll save nearly $50 a month in repayments, and more than $10,000 in interest over the life of your loan.