Some people will always get their mortgage broker to negotiate rates and refix their loans while others will deal directly with the bank.
In many cases the banks want people to deal direct and actively promote this.
They have even set up automated processes so you can refix your loans inline with the simple click of a button.
So with the banks making this process so easy, why would you bother contacting a mortgage broker?
Should You Get A Mortgage Broker To Refix Your Mortgage?
Why would you get a mortgage broker to refix your loans?
It seems like a bit of a hassle when the bank can refix your loan online or on the spot.
A mortgage broker needs to get an authority signed, source and negotiate the rates and then confirm.
And won’t a mortgage broker just get the same home loan interest rates anyway?
As mortgage brokers we know that the interest rates that we get may not be any better than the bank is offering, but we also know that often we will get better rates. The reason for this is we are dealing with a lot of banks all of the time and so we know what the rest of the banks are offering. We can put some pressure on the banks to ensure that they are competitive, and this should also give you the confidence that you are getting a competitive home loan rate too.
We call this “keeping the banks honest” and it’s something that we love to do … and do for FREE.
We have all seen the huge profits that the banks make.
While the banks marketing is all about looking after people, they are a business and the first responsibility of the banks is to their shareholders. To ensure that the banks owners are making a profit.
Of course they are operating in a competitive market, but they will try and squeeze a little extra profit where they can and existing bank customers are an easy target.
Banks Don’t Always Offer The Best Interest Rates
The banks are automating a lot of processes.
It is a smart thing for the banks to do as it enables them to reduce the number of people that they employ (saves costs = more profit) and they know that many of their customers will use a ‘quick and easy’ option if they can and this means that they do not have to offer the lowest rates (higher rates = more profit) as people will assume the rates are “special” to them anyway.
This is the home loan rates offered by ASB Bank today.
You can see that the advertised standard rate for 1-year fixed is 4.45% and the special rate is 4.05%
The banks know that if they offer a “special rate” then most people will think that it is “special” and a good rate.
Real Story – Today
This morning I was speaking to a man about his ASB home loan.
He mentioned that he had contacted the bank and refixed his loan for 1-year at 4.05% and he was a little taken back when I said that was not such a good interest rate and asked him why he had contacted me after already speaking to the bank.
This person really believed that the bank had given him a very good “special” home loan rate as he was a long time loyal bank customer.
I contacted the bank and arranged a more competitive rate of 3.99%
This mans home loan was $307,454 and with the saving of 0.06% it will save him just over $180 for the year.
Of course like most Kiwis this man had the choice of contacting the bank or a mortgage broker but he really thought there was no benefit in contacting a broker.
He actually thought there would be a fee.
He now knows that we do not change a broker fee for this service (as the banks pay us) and in this case we were able to get him a lower home loan interest rate.
Why You Should Contact A Mortgage Broker
As mortgage brokers we cannot guarantee that you will get a lower interest rate, but you should never be worse off either.
The key point that we make is you can be confident of getting a competitive rate.
This is one very good reason to use a mortgage broker.
But at times we may also have some suggestions that could also make a difference.
Often we see mortgages that have been structured in a way that may be easy for the bank, but do not benefit the customer – you.
We also often see other debts that may be better incorporated into the mortgage. This can be personal loans, credit cards and store cards where the interest rate that you are being charged is a lot higher than you would pay if that lending was linked to the mortgage.
With it costing nothing to speak to a mortgage broker there is nothing to lose … and may be a lot to gain.
