When something looks too good to be true, it usually is.
We are currently seeing some home loan customers being offered new deals on their mortgages which at face value look like their bank is doing a fantastic job looking after them but, when more closely examined, the reverse is true.
With mortgage brokers now accounting for almost two-thirds of the nation’s home loan market, banks are fighting back with either better deals for customers or by making life difficult for brokers and their clients with slow processing times.
One of our clients who is about to come off a fixed interest rate was offered some simple solutions by their lender which seemed very appealing at first glance.
Their lender offered to re-fix their loan for a further period. They could elect to do this simply via their banking app/Internet banking site. If not, the mortgage would simply roll onto a variable rate, with the bank stating they would give them a discount off the standard variable rate.
All the work would be done by the bank regardless of the customer’s choice.
Our investigations found the variable rate discount offered was 1.32 per cent off the standard variable rate – which at face value may have sounded like a good deal. However, we were able to get an instant rate discount approved of 1.90 per cent via the bank’s broker portal. We also found the quoted fixed rates were based on loan to valuation ratio (LVR) of 80 per cent, when in fact the client’s loans are under 60 per cent LVR which qualifies them for lower rates than those stated.
The reason brokers have grown their share of the home loan market over the past two decades is they actually help customers save money.
Some mortgage holders might think their bank is really looking after them and giving them special treatment, but it’s not always the case.
Talk to a broker!