5 things we consider when shopping for a better rate for you
At HoLo we love to haggle. It’s in our DNA. And with so much competition for borrowers right now, there are some crucial things to consider when searching for the right rates for our clients. Here are some of the pitfalls HoLo brokers are always on the lookout for.
The key points to watch out for:
1: The interest rate (as a starting point only)
2: Comparison rate & other fees
3: Being bedazzled by cashback offers
4: Not investigating debt consolidation
5: Trying to go it alone
1: The interest rate (as a starting point only)
Sure, getting a more competitive interest rate is appealing, but there are other factors to consider when comparing loans.
For example, features such as an offset account or redraw facility may meet your specific needs, even if the interest rate is not necessarily the lowest one available. You may also want to consider how important customer service is to you. Unsurprisingly, it can really differ from bank to bank!
And if that wasn’t enough, be aware that while some lenders seem slower to pass on rate rises, they do still end up passing them on. What seems like a good rate today might look as good as others next week.
2: Comparison rate & other fees
You may have noticed that banks sometimes list both an interest rate and a comparison rate. The comparison rate isn’t the rate you pay, however it can give you a sense of the true cost of a loan. This is because it includes any fees & charges and allows you to compare different options using a standard example loan amount and term (time frame).
For refinancers, there may also be costs involved in switching lenders. There may be mortgage discharge fees, mortgage registration fees, new application fees and LMI - Lenders’ Mortgage Insurance (likely to be in place if you owe more than 80% of the property’s value on your current loan).
If you are currently on a fixed rate deal then there may also be break fees. Ask your lender for clarification.
3: Being bedazzled by cash-back offers
Yep, competition is fierce as mentioned earlier. Many lenders are offering incentives, such as refinance cashback offers, to lure you in. “Come hang with us and we’ll give you $4000.” Sounds awesome, right?
Cashback offers are like a guilty pleasure - there’s that lovely feeling of reward, which eventually leads to that questioning: was it really with it? A bit like indulging in cotton candy at a fair – you get a delightful and instant burst of sweetness, only to lead to a sugar crash later on.
Cashback offers are like a guilty pleasure - there’s that lovely feeling of reward, which eventually leads to that questioning: was it really with it? A bit like indulging in cotton candy at a fair – you get a delightful and instant burst of sweetness, only to lead to a sugar crash later on.
Similar to how stallholders entice you with vibrant and captivating displays, lenders attract you with appealing introductory terms. However, they may ultimately result in higher rates - and repayments - over the long run.
While we all love a cash reward, it’s important to look at the big picture and whether that home loan is appropriate for your needs now and in the future. Does it have the right features? And is it suitable for your financial situation and goals?
4: Not investigating debt consolidation
If you have multiple debts on the go, HoLo can help you figure out whether debt consolidation is right for you. This is where you essentially roll all your debts into your home loan and free up additional cash for yourself.
Debt consolidation can be beneficial in that you have one repayment to make instead of multiple debts to repay. The interest rate on your home loan may also be lower than any personal loans or credit cards, so it’s worthwhile exploring this option. Further information about debt consolidation can be found on the factsheet available on your dashboard, once you’ve registered. Create an account now if you haven’t.
5: Trying to go it alone
So, you do a little Google wizardry and find some obscure home loan provider with a rock-bottom rate and you think ‘boom – this is the home loan for me!’ Unfortunately, it’s not that simple.
A home loan is an important financial decision, which is why you should use professionals that are expert negotiators. When banks say “This is the best rate we can do” HoLo likes to go into bat for you. As we mentioned…. we love to haggle!
These are just some of the factors HoLo considers - there are many more. The HoLo team is across all the latest borrowing requirements and changes in the market, meaning smart negotiations on your behalf. With guidance through the entire process, HoLo will help you find the right loan, at the right rate, to suit your needs.
If you’d like to know more, book an appointment or contact us.