Negotiating Rates

[reybar]

Hi all,

I've got a $338k loan with NAB at 5.00% interest rate.
After finding out that friends, also with NAB, with a similar size loan and LVR are getting 4.84% pa, I decided to call NAB and discuss a rate cut.

I explained that I could get 4.84% at Maquarrie Bank, and even less at a credit union like CUA. They've now gotten back to me and said, they've reviewed it and can give me 4.90%, and will give me until tomorrow to accept it.

Now I know we're only talking about 6 basis points here, but the principle of it makes me want to reject the offer and go elsewhere. They've said that it'll cost me to refinance, and I'm not likely to get the same service/package they can offer (bs).

Any suggestions before tomorrow on how I could make them feel threatened that I may actually leave? I would prefer not to for both refinancing cost, and time (currently have our credit card with NAB and a whole bunch of direct debits already set up).

Thanks

Reybar

 

[Brady]

Hate to say it but they deal with exactly this every single day. They would of looked at the costs 0.06 % is $202.80 based on your balance of $338,000

4.90% is a reasonable rate at a major bank for an existing customer with borrowings of that level. Understand it's a pricipal thing, but are you prepared to go through a refinance for $202.80 interest savings less discharge/registration/settlement costs.

When and if you buy another property, this is really when you have the upperhand on bargining with the banks. You have more to bargin with at the other bank and with the existing.

You just saved $338 by ringing up and getting 0.1% discount, dont through it away

 

[Mick C]

Refinance cost - some banks are willing to absorb ( you may be out of pocket by $100-$300)...everything is negotiable .

Really comes down to time...if you have the time to go through the refin process.

For your loan amount at 80% with 100% offset you could try

Citibank 4.68%
Gateway credit union - 4.63% ( 75% LVR) - 4.73% ( 80% lVR)
Some of the other credit unions - Sub 4.60%
Online banks - Sub 4.50%

^ But rate is just one part of the equation....the loan should fit your short and long term goal as well...ie some of the credit unions doesn't have the best cash out policy etc...

Cheers

 

[Rolf Latham]

small bickies in reality unless its your last loan ever in which casego and chase Heritage with a sub 4.5% rate

your time may be better spent makeing a bigger pie,or indeed getting a new kitchen

ta
rolf

 

[Jamie M]

Hi Reybar

What's the LVR?

If it's currently less than 80% - was it ever higher?

Cheers

Jamie

 

[Redom]

Hi all,

I've got a $338k loan with NAB at 5.00% interest rate.
After finding out that friends, also with NAB, with a similar size loan and LVR are getting 4.84% pa, I decided to call NAB and discuss a rate cut.

I explained that I could get 4.84% at Maquarrie Bank, and even less at a credit union like CUA. They've now gotten back to me and said, they've reviewed it and can give me 4.90%, and will give me until tomorrow to accept it.

Now I know we're only talking about 6 basis points here, but the principle of it makes me want to reject the offer and go elsewhere. They've said that it'll cost me to refinance, and I'm not likely to get the same service/package they can offer (bs).

Any suggestions before tomorrow on how I could make them feel threatened that I may actually leave? I would prefer not to for both refinancing cost, and time (currently have our credit card with NAB and a whole bunch of direct debits already set up).

Thanks

Reybar

If rate is the prime consideration, and you're not looking to build a portfolio, go to the online cheapies. They'll shave 50bp+ off that rate.

If you're looking to purchase future IPs, than best to consider how rate seeking impacts overall finance plan.

Cheers,
Redom

 

[reybar]

Hi Reybar

What's the LVR?

If it's currently less than 80% - was it ever higher?

Cheers

Jamie

The LVR at the time of purchase was 80%.
We haven't paid anything off the loan since then. Have an interest only loan and have put all our money in a 100% offset account.

 

[reybar]

If rate is the prime consideration, and you're not looking to build a portfolio, go to the online cheapies. They'll shave 50bp+ off that rate.

If you're looking to purchase future IPs, than best to consider how rate seeking impacts overall finance plan.

Cheers,
Redom

Rate isn't the only consideration. I'd like to keep the principal untouched to maximise tax benefits if we decide to keep the property as an IP later.
Basically looking for the best rate possible, while keeping the loan IO with a 100% offset account.

 

[Redom]

Rate isn't the only consideration. I'd like to keep the principal untouched to maximise tax benefits if we decide to keep the property as an IP later.
Basically looking for the best rate possible, while keeping the loan IO with a 100% offset account.

This product has all of the above and shaves off 50bp. Cashing out, flexibility to variations, online lender only, likely poor service - are the downsides though.

https://www.loans.com.au/home-loans/loans-com-au-value-pack

Cheers,
Redom

 

[Rolf Latham]

This product has all of the above and shaves off 50bp.

https://www.loans.com.au/home-loans/loans-com-au-value-pack

Cheers,
Redom

Functionally, offset probably yes, though I havent seen the PBR that backs it, I have agreed that in principle from the evidence presented that the Firstmac offset is ok for tax purposes, subject to the borrowers own specific tax advice.

Structurally, when ( note not if, but when) we go back to times of funding liquidity issues, the difference between a discrete offset from a deposit taking institution ( ie a separate bank account) vs what is effectively a redraw may become apparent.

if its a fully drawn facility and you have no money in it, no hassles, but if you have your 200 k surviveability buffer in the "redraw" and the lender cant provide you the funds because everyone else wants theirs.... ..... I know it will likely never happen, and capital provisions should ensure its unlikley, but its wise to perhaps read the specific T&Cs as to how and when your lender must allow you to redraw your money - makes for interesting reading.

Its not my area of expertise, I know a couple of regulars here hve specific experience and may be able to comment.

ta
rolf

 

[tpepper]

Hi all,

I've got a $338k loan with NAB at 5.00% interest rate.
After finding out that friends, also with NAB, with a similar size loan and LVR are getting 4.84% pa, I decided to call NAB and discuss a rate cut.

I explained that I could get 4.84% at Maquarrie Bank, and even less at a credit union like CUA. They've now gotten back to me and said, they've reviewed it and can give me 4.90%, and will give me until tomorrow to accept it.

Now I know we're only talking about 6 basis points here, but the principle of it makes me want to reject the offer and go elsewhere. They've said that it'll cost me to refinance, and I'm not likely to get the same service/package they can offer (bs).

Any suggestions before tomorrow on how I could make them feel threatened that I may actually leave? I would prefer not to for both refinancing cost, and time (currently have our credit card with NAB and a whole bunch of direct debits already set up).

Thanks

Reybar

If they still will not budge on rate ask if there is anything else they can offer for you to stay? someone I know did this recently and NAB put $1000 into their home loan, (they had less than 80% LVR on one house )

unbelievable but true story!