As I’ve mentioned, lenders often offer a better rate for a large loan, for example, 0.9% or more off the Standard Variable Rate instead of 0.7%. That extra 0.2% can make a BIG difference.
Some lenders may charge a $600 application fee but waive it if the loan is over a certain amount. Some lenders are able to access discretionary and ‘private banking’ pricing, where they will actually make special offers to win quality loans.
Lenders CAN be persuaded to sweeten their terms if you know the right questions to ask.
If you still can’t get a discount – try this!
If you aren’t borrowing enough or don’t meet your lender’s other requirements to qualify for a discount, I generally recommend a basic, variable rate.
A discount loan is a bank’s standard loan with a reduced interest rate. The discount loan usually has an Offset Account or direct payment feature, which the basic loan doesn’t. However, in most cases it is worth it to take the basic loan, which should have an interest rate similar to the discount loan, but without a few bells and whistles.
Certainly, I would almost always suggest that you take a basic loan if you can’t get a discount off the standard loan. This is because the additional features of the standard loan are rarely worth the higher interest rate compared to a basic loan, which is usually 0.5% cheaper, and that equates to $1,500 per year on a $300,000 home loan.
As long as the basic loan allows you to make extra repayments, you probably aren’t missing out on too much by choosing it. Basic and cheaper is almost always better than fully featured and more expensive.
Without a compelling reason to do otherwise, choose the lowest cost loan.
Many lenders offer fantastic basic loans these days with very few restrictions; so, if your lender only offers you a standard rate, be sure to ask to see their full list of loan offers.
Valuable Resource: are you eligible for a discount?
Speak with your Mortgage Australia Broker to find out the discount loans you are eligible for Just let them know you have read our blog or ‘The 7 Easy Steps to Mortgage Freedom’ and they will know how to help you
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