Over the years how we look for a better home loan rate hasn’t changed much. Effectively whoever has a bigger marketing budget (also with the ability to spend on ad words on google) would ideally be able to get out into the market and pretend that they offer the best options.
If you look closely there are three ways to how we can currently shop around for a better rate for mortgages;
- Visit a bank or a number of banks and compare
- Go to a broker
- Browse a comparison website
While all of the above options have its merits, I find that there are plenty of disadvantages in choosing one particular option. A combination of the above options would ideally give customers the best possible solution I feel.
For an example; Sam & Kate currently have a mortgage with “X bank” for a live in property, they are paying around 4.37% and feel that there are plenty of players out there who are offering better home loan rates.
In this instance, Sam and Kate could first look through a comparison website and get an understanding about the current market rates, then go to “X bank” and negotiate a better rate with the Manager or Lender. If “Bank x” in this instance cannot compete or not in a position to offer a considerable rate discount, Sam & Kate can contact a broker to refinance the loan to a competitor or get the comparison website which they visited earlier with their details so that a representative could contact them to go through the steps.
The whole process above is a bit of a cat and mouse game. It’s obvious that the balance is in the favour of the brokers and lenders at all times since your room to negotiate is quite limited. Notwithstanding the fact that;
· The same bank can quote you different rates depending on the lender. The options are limited in most cases.
· Brokers write the business to where they get most commission from and they hardly represent the small players (Credit Unions and mutual banks etc…)
· Comparison websites only compare if they get paid to advertise on their page.
In other words, no one is truly unbiased or transparent. This is not stating that all people are out there to get you. Some lenders and brokers are absolute gems, they understand their customers and try and do what’s right by them. So if you have found that broker and or lender stick to them and stay by their side.
As to how to look for a better home loan rate? Well… it’s not a mystery. There are currently three options (as mentioned above). But we will create one more option and it will be readily available for you very soon. Something that will put you in the driver seat and as opposed to the lenders, brokers and comparison websites. Watch this space
This blog post has not taken into account your objectives, financial situation or needs. Due to this, before acting on any general advice/information in this communication, you should consider whether it is appropriate to your objectives, financial situation or needs.