Reducing upfront fees
You may be able to negotiate with your lender a discount on application fees. This may result in savings of up to $600, which may be directed at helping you pay for other costs such as conveyancing or stamp duty, or it may add to your deposit. Whilst obtaining a reduction for fees and charges associated with your loan may save you some money, keep in mind that sometimes these reductions will not save you as much as a lower interest rate.
Negotiating interest rates generates the biggest savings
Even a small reduction in your interest rates may result in savings over the term of your loan. For instance, if you borrow $500, 000, a 0.1% discount will save you in interest, approximately $500 per annum.
So, a $500,000 loan with an interest rate discount of 0.50% p.a. on a 25 year loan, will reduce your average annual interest expenses by approximately by $2,500. Over the term of a loan, this will save you approximately $62,000.
If you are borrowing more than $150,000, most lenders will often offer you a discounted interest rate of up to 0.7% off the standard variable rate, starting with discounts at 0.5% for a $150,000 loan. This may however attract an annual fee.
Mortgage counter offers
Good mortgage brokers have a network of lenders in which they know will negotiate on a loan. Their knowledge, experience and links with these lenders may be useful in the negotiation process and to help you to receive and assess counter offers from potential lenders.
Know your negotiation position when you make a purchase offer
Ensure that you have a sound understanding of your finances, including your borrowing capacity and a comfortable repayment schedule. It is important that you consider the influence of a higher purchase offer on your repayments.
