Save Thousands of Dollars from Your Mortgage Repayment!

Hey guys,

My friend recommended I read a book called 'Barefoot Investor' and the information in there has been very beneficial so far.

One tip in particular that could potentially save you thousands of dollars off your mortgage is the following:

1) You check Ubank to see what interest they charge
2) You call up your bank and ask for the 'Customer Retention Department'
3) You use the following script:

You: "Hello, my account number is (8439284798327) I've been with you for (20) years, but I've applied for refinance at UBank. Their rate is (3.74%), which is a full (1.5 %) cheaper than you're charging me. Given our longstanding relationship, I'd like you to match the offer - or send me the forms I need to switch to UBank"

Bank Rep: "We can't match the rate you have quoted. However, we understand you are a valuable customer, so we would like to offer you a (0.75 %) discount.

You: That's not good enough. I've already got conditional approval... so in order to stay I need at least (1.5%) discount. Could you please speak to your supervisor? I'm happy to wait.

Bank Rep (a full six minutes later): On reviewing your case, we can offer you that (1.5%) discount on your current rate.

You: Brilliant! Please sent me an email confirming the new rate and confirming that it will be applied as of start of business tomorrow.

If you have a good mortgage broker I guess they'd do all the shopping for you to ensure you get the best rate and terms to suit your needs, but if you are like most people and go directly to your bank whom you've been with for decades, they may not necessarily offer you the best rate or let you know that competitors are offering better deals.

My mother for instance is currently being charged 5.2% on her home loan, and has been with her bank for over 20 years. So much for loyalty...

 

Rates arent the most important thing. Esp when it comes to loan features and maximising loans in the future. The bearfoot investor is fine for people who have one loan, but thats about it.

for sohisticated investors who look to strata title and build, the barefoot investor is pretty pedestrian.

 

Sounds great in theory.

Doesn't happen much in real life though. WBC gave me a discount (broker Corey contacted them on my behalf) because of the volume I have with them. I think unless you have a good amount of loans and a good LVR they're not going to do much. Most people aren't going to go through the cost / time / trouble of changing. Especially investors for whom the rate isnt very important... need to be with certain lenders due to policies and wanting to expand their empires at their chosen rate.

 

irony reading the book half way through

 

Barefoot is a fantastic book and I've personally bought them for family members, but the issue with the book is that it's not geared towards property investors. As mentioned by other people already, it's not just the interest rates that should be the first point of call but the way your loans are structured, so that it can plan the next couple of moves for you. No point getting the cheapest loans early on and you can't purchase any more ips when it required some planning and structuring.

 

Pricing and discounting is a little more sophisticated than that; but the general point of:
- Calling lender and requesting a discount often yields fruit is true.

The when you ask is often the biggest factor to repricing. A few months ago IO loan calls wouldn't be very useful. Today its more likely to get you something than before as the market is competitive and lenders are keen to hold onto existing IO loans a bit more.

 

Yes it is a good tip and one you should use periodically. Whenever you speak to a bank person they actually ask "is there anything else I can do for you? " and that is your que to say actually there is....

 

This process sounds great. Call NAB and try that script and see what happens.
(NAB owns UBank)... Its like calling WBC and telling them that STG offered a lower rate. May happen but dont expect to be bowled over

 

It still can't hurt to ask. worst they will do is nothing

 

Your success will also have a lot to do with the amount of lending you have, and the LVR of your loans.

 

Barefoot investor is a great for your "mums & dad" types who are essentially financially illiterate in many instances. He has some good sound financial strategies that will work well for many people hence his popularity.

He also advises asking your broker to rebate their remuneration. What other profession does such a thing? Talk about devaluing your proposition if you have to pay people to engage your services.

 

Agree with the comments that total loan amounts,& LVR will be considered, and that your willingness to walk has to be there (and be believed).

We are renegotiating a CIP loan now and have made it clear that the bank needs to treat us as a new customer (ie attractive rates & conditions) rather than taking us for granted. We also started the process a couple of months early, making it expressly clear that we wanted plenty of time to put the business out to tender at other banks if they weren’t willing to sharpen their pencil enough.

We will see how we go!

 

I tried asking my Dr half their Medicare fee back. Didn't work.

 

I have no loyalty to any lender.
I just get my broker to source out the best loan suited to my needs along with the most competitive rates.

I do my own due diligence then jump ship.
I get the phone calls asking why I'm leaving but they don't mean anything.
Brokers are generally happy to take the cost of transfer fees so its a win-win for broker and borrower.

Major bank loyalty is over-rated.

 

The Barefoot Investor also recommended cutting up your credit cards. Kinda shows the audience it's aimed at, those who can't control their spending. There's hundreds of dollars of credit card rewards you can take advantage of if you just pay the closing balance monthly, before the interest free period expires.