If you aren’t already a ‘Safe Borrower’ (as I have defined in earlier posts), you will be one in the future by maintaining an orderly repayment history as you build equity in your home. Just don’t expect your bank manager to call you up and offer you a cheaper rate when you get there, you’ll need to ask for it or get your Mortgage Broker to find out which you qualify for.
Even if you aren’t already a Safe Borrower, you can still take advantage of special lending offers. Lenders typically promote a “Standard” rate loan through their advertising and on their websites.
Always investigate the discounts your lender offers. Every day, people who have had loans with their bank for years have missed out on taking advantage of discount packages they were eligible for. They end up paying thousands in extra interest.
Key Point: Claiming your status as a Safe Borrower pays off because a discount of a 1% lower interest rate saves you $159,559 in interest on a $300,000 home loan.
The discounts offered in these packages vary widely, as do the standard rates the lenders offer. Usually, the discounts range from 0.3% to 1%; sometimes more, sometimes these discounts are applied only to the variable rate, but sometimes also to the lender’s fixed rates.
Eligibility for the discount is also based on the amount you are borrowing. Larger loans typically qualify for larger discounts. The discount package may require you to take out a credit card with a minimum limit or open an additional account with the lender.