Is there value is being loyal to a bank ?

[Brady]

1. If all your loans are with one lender it doesn't really matter if they are crossed or not because of the "all monies" clause in the loan contract. True at this LVR it is unlikely to ever be an issue, unless the strategy all of a sudden becomes to aggressively build an investment portfolio
2. Half the loans are fixed so you are not in much of a position to bargain with the bank now as there will be a significant financial penalty for leaving - they will likely bet you won't walk
3. Aggregate borrowings with a lender will get you better rates (if you ask). And a broker will get you a better rate than you will get through Private Banking and give better service
4. For insurance go to a broker who is "provider agnostic" as they will get you the best terms and price
5. Back to lending for a minute, if you are continuing to grow your portfolio and run out of serviceability you will need to go to a lender who assesses your current loans at what you are actually paying rather than at a sensitized rate

1. Already been shot down by...
2. Far from the truth, always room for negotiating. And half fixed means still able to refinance other. Banks don't make money if they don't have the loans, so money is better then none
3. Possibly be able to get a better rate through a broker rather then private banking but as mentioned about that's not what they are about from my understanding. Also a banker or premier banking can get get the same rate as a broker, those that think they can get a better rate at Cba because they are abroker over a banker are liars. And what a laugh to think that you can get better service, you wouldn't be able to provide half the services
Private bank have access to. Private banking is far from just home lending, infact they don't really want to have clients who are just sole home
Lending as other areas of the bank could assist.

 

[Tonibell]

Thank you for all the replies.

We are definitely happy with the service we receive from CBA and feel a loyalty to the bank and the personal banker we work with.

It is just annoying the perhaps that loyalty is not repaid in the ways that we expected it would be. I think we have read and experienced enough to now know we have to do independent checking to make sure we have the best product and competitive pricing from them.

We are just finishing a project and need to get that leased to restore our cash flow to something reasonable before we can do anything further. At that time we will have to decide whether to stay with CBA and get some re-pricing done or take the new business and perhaps some variable loans elsewhere.

Would have much easier if CBA were pro-active about retaining loyal customers.

 

[Peter_Tersteeg]

Would have much easier if CBA were pro-active about retaining loyal customers.

There isn't a single bank out there who is proactive about this.

 

[Tonibell]

There isn't a single bank out there who is proactive about this.

So are brokers typically pro-active about this ? I imagine they also only want to see you when you are borrowing more funds.

 

[Peter_Tersteeg]

The honest answer regarding brokers is that they're not proactive about it either. With thousands of loans written it's simply not manageable. Ultimately the only person who's going to be truly pro-active about this sort of thing is yourself.

Brokers don't have the ability to look at your account either. Despite keeping excellent records about past loan applications I probably wouldn't be able to tell someone what their current interest rate is after 5 years.

Many brokers do however send email or printed newsletters as well as other ongoing 'remember us' stuff (we send a monthly email, quarterly magazine, birthday and Christmas cards). I'm often called by clients years after the original loan to renegotiate.

 

[tobe]

Ive seen broker newsletters where the average current interest rate discount is advertised, so 'if your rate is above this give us a call and we can get you a new discount' etc.

The broker isnt being pro active as such, but sometimes they do remind clients to be pro active.

Interest rate is only one factor in choosing a home loan. Its much more important to have the right structure/lender policies etc.

 

[Tonibell]

So, CBA will treat us pretty much the same whether they have 100% of our business or 50%.

Perhaps they will treat us even better if they have only 50% because they know we can easily put new business elsewhere.

This is not how we saw things previously.

 

[Aaron_C]

So are brokers typically pro-active about this ? I imagine they also only want to see you when you are borrowing more funds.

Brokers are proactive for the current climate but you have to understand that the discounts vary according to when the loan settled. Last time a 1% discount off the SVR with the majors was considered a major coup. Now 1% is considered pretty expensive. It's impossible to keep track of every loan a client has.

 

[Aaron_C]

So, CBA will treat us pretty much the same whether they have 100% of our business or 50%.

Perhaps they will treat us even better if they have only 50% because they know we can easily put new business elsewhere.

This is not how we saw things previously.

Having leverage is the best way for business deals

 

[punterncollect]

Thank you for all the replies.

We are definitely happy with the service we receive from CBA and feel a loyalty to the bank and the personal banker we work with.

It is just annoying the perhaps that loyalty is not repaid in the ways that we expected it would be. I think we have read and experienced enough to now know we have to do independent checking to make sure we have the best product and competitive pricing from them.

We are just finishing a project and need to get that leased to restore our cash flow to something reasonable before we can do anything further. At that time we will have to decide whether to stay with CBA and get some re-pricing done or take the new business and perhaps some variable loans elsewhere.

Would have much easier if CBA were pro-active about retaining loyal customers.

I am coming in late on the thread but I was in your position with CBA 10 years ago (so can relate to it big time) & as the IP's/Dev's got bigger I was involved in, they basically refused to trim their rates much, if at all & I had been with them for 35 years at that stage I even started my working life with them!!; so I shopped around then moved to the ANZ (ok for 5 years)& then post GFC when the NAZ got the property wobbles, I had to move to the NAB (hate all the mucking around with accounts etc in changeover) where I am still now. But the banking world is very different now & you HAVE to shop around with your business or ANY bank will take you for granted. I wouldn't be surprised if in 3-4 years I will change again not because I want to, but their (banks) risk profiles keep changing towards property with the economic times!! Bon chance!

 

[Chris B]

So, CBA will treat us pretty much the same whether they have 100% of our business or 50%.

Perhaps they will treat us even better if they have only 50% because they know we can easily put new business elsewhere.

This is not how we saw things previously.

The lack of loyalty by companies to existing customers does not just apply to banks.

Insurance companies - most companies will increase their premiums after the first year of a policy, as they know that while people shop around to choose an insurance policy when they buy a car, house, etc they are less likely to bother changing each year. My car policy increased by $100 even though the insured value of the car dropped by $750. The renewal notice even said they were giving me a 10% discount for a good driving record. I enquired with the same company as though I was a new customer and the quote was over $100 cheaper.

Employment - the best way to get a decent pay rise is usually to find a new job (or the same job with a different company).

 

[Deltaberry]

No there is no benefit being loyal to a bank. Maybe being loyal to a good banker.

 

[cadence]

Never hurts to ask around. Try speak to some other banks if you have time and see what they can offer you.

If the difference is not substantial, then you might as well stay put.

If the difference is significant, gives you some food for thought.

 

[perthguy]

If the securities are not crossed then the process is much easier. No reassessment or valuations of remaining security are needed.

This is correct. Last year I had 4 loans across 4 properties, all with the same lender. I didn't apply to the bank to sell one property. I just sold it and put in an application to close the loan. This was all arranged prior to settlement and the loan was closed at settlement. This process didn't affect any other loan as loan for the property I sold was not crossed with any other property. It didn't matter that all the loans were with the same lender.

 

[HiEquity]

No there is no benefit in being loyal to a bank, or insurance company, or almost any other business I can think of, outside of sole traders / small businesses where you can develop a personal relationship and mutual understanding with the actual owner of the business.

Instead there is usually a "loyalty tax", which refers to the fact that most companies like banks give new customers special offers which they don't offer to their existing customers. Things like introductory interest rates, lower fees or for insurance just straight out lower premiums, which get ratcheted up every year thereafter assuming most customers are "sticky".

As for obtaining finance, I make it a habit to spread my debt across as many financial institutions as possible. Why would I want one company knowing everything there is to know about me?

As with most things in life, it pays to shop around!

 

[Aaron_C]

My father wanted to add an insurance policy to his existing insurer but they declined it because he had a claim 3 years ago. He then went to a different insurer with ALL his policies, the old one called him up and he said too late. They lost $6k of premiums in one hit, nice one.

 

[lenojd]

As for obtaining finance, I make it a habit to spread my debt across as many financial institutions as possible. Why would I want one company knowing everything there is to know about me?

But don't you need to disclose all your information to each lender anyway?

I've just gone through this process for my second IP and went with a different lender. Could I in the future go to another lender again and not tell them about my existing loans for serviceability reasons?

 

[lenojd]

My father wanted to add an insurance policy to his existing insurer but they declined it because he had a claim 3 years ago. He then went to a different insurer with ALL his policies, the old one called him up and he said too late. They lost $6k of premiums in one hit, nice one.

Insurance companies are much further behind here than banks it seems.

I was in a situation a year or so ago that went something like this that baffled me completely:

- From memory I had 3 policies with NRMA with a renewal for one due.
- I had actually missed the payment due date by long enough that the price was no longer valid and the new quote was actually more expensive - by $50-100 so I shopped around.
- Found a more competitive price elsewhere for this policy but knew that by taking it out I would have lost my multi-policy discount thus making the 2 remaining policies uncompetitive.
- Called and explained the situation and asked if they could honor the original price due that I missed to which they replied no.

I then informed them that it no longer made sense for me to keep any business with them and if there was anything they could do or was there someone I could talk to, they replied no as each business unit is different.

So I move everything elsewhere.

A very similar thing has happened with GIO.. a few policies were competitive but one wasn't so asked if they could help with that one so I could bring all my business across... they said there was nothing they could do at all!

At least banks have moved to a single view of the customer but it seems insurance companies are still a long way behind.

 

[Rolf Latham]

Could I in the future go to another lender again and not tell them about my existing loans for serviceability reasons?

not a good idea

full disclosure is best

ta

rolf

 

[Peter_Tersteeg]

But don't you need to disclose all your information to each lender anyway?

I've just gone through this process for my second IP and went with a different lender. Could I in the future go to another lender again and not tell them about my existing loans for serviceability reasons?

Don't do this.

In their Ts & Cs the lender does ask for full disclosure of existing debts. If you don't disclose them, you're effectively committing fraud. If that fraud is discovered and determined to be deliberate deception on your part, the loan will be declined and they may investigate further. If they've already funded the loan the lender can take action to recover the money.

I can assure you, lenders do have ways of finding out this sort of thing. The new privacy laws actually make it quite easy for them.