Getting the Best Deal From the Banks
What an emotional roller coaster buying a house is.That’s not too surprising – after all it is probably the biggest purchase you will ever make! Depending on the market, many purchasers will at least try to reduce the asking price by negotiating with the vendors. You might end up knocking a small or sizeable amount off the asking price. Everything counts – Just $1,000 saved on the purchase price means that money can perhaps go towards a survey or your solicitors’ fees leaving you with more money! So where else can money be saved when house buying?
You may be surprised to know that the banks’ advertised mortgage rates, known as the card rates, are not set in stone. You can haggle with the bank too! I don’t just mean your bank – you can negotiate and ultimately chose any bank for your mortgage. There are many banks out there, ANZ, BNZ, Kiwi Bank, TSB and so on and they are all hoping to lend to property purchasers. Remember as a borrower you would be a valued customer to a bank. This gives you buying (and negotiating) power.
I started by taking a look at some of the different rates on offer for the type of mortgage I was looking for. This is relatively simple with sites like www.interest.co.nz. Here you can view in one place the card rates offered by the various banks for the different types of mortgages they offer (for instance, one year fixed, two year fixed, floating and so on).
Pick out a few banks that seem to be offering good rates and contact them with some basic information about yourself and start negotiating. When contacting the banks to negotiate you don’t need to complete a full mortgage application. Just give them an outline of your situation: That is probably the deposit you have available, your earnings, the property you want to buy and the loan you are interested in.
Then be bold and be cheeky! It is as simple as telling the banks that you are looking for the best possible rate and are considering a number of lenders. Ask them what their best rate to you would be. You might be surprised how quickly the card rate will be reduced for you. Don’t stop there! Take the lowest rate you are offered and use this to negotiate further with the other banks. Further reductions may be forthcoming.
It is not just about interest either - make sure you also ask how much the bank will charge in fees and ask for a reduction on these as well. See if they will make a contribution to your legal fees or give you cash back. Then see if they will offer you any free banking facilities! It all counts...
By spending a couple of hours just asking and negotiating with banks this week I saved myself about $2,500 in interest and fees and got $2,000 towards costs and cash back! $4,500 is not an insignificant sum of money especially considering it took less than two hours!