Talk to mortgage lenders now before it is too late

Increased competition between lenders, access to cheaper funds and a drop in overall lending volumes mean now is an ideal time for borrowers to negotiate with lenders – but not for long.

Competition and ability to negotiate means the discounts currently on offer are well worth investigating.

First-home buyers are likely to benefit from lower interest rates and discounts on application fees, while investors and existing borrowers would do well to speak with their lenders to renegotiate rates.

Borrowers looking to finance a renovation or consolidate debt can also take advantage of these specials and lenders’ willingness to negotiate.

Likewise, if you’re not satisfied with your current lender, now may be the time to shop around and investigate other opportunities.

As an added incentive for borrowers considering refinancing, some lenders are offering to cover the cost to switch.

Depending on personal circumstances and requirements, most discounts were tiered – meaning the more you borrow, the bigger the discounts.

However, that doesn’t mean that you should “over reach” on your borrowings for the sake of a lower rate and potentially put your financial security at risk.

Interest rates are constantly in a state of flux and while they’re presently quite low, it’s important to take potential future rate increases into account.

Even though the lenders are willing to talk and the rate offers appear competitive, you may actually be better off postponing a proposed purchase to fully investigate the property market or save more deposit.

Regardless, it’s always worthwhile to investigate opportunities – and your mortgage adviser can do all the legwork on your behalf.

To borrowers who might have put their property purchasing plans on hold in recent times, I suggest revisiting plans in light of lenders’ interest in securing your business.

Take a good look at your financial position and if you are ready to proceed then now is a good time to put your plans into action as these savings won’t continue for much longer.

Borrowers have more chance of negotiating a better deal with lenders if they had their “financial house in order”.

If you’re serious about negotiating with your lender, it’s important to demonstrate a good financial track record, which will include things like having a savings plan, being up-to-date on bill payments and that you’ve resisted signing up for additional debt.

This is increasingly important as more and more of your repayment history is being recorded on your personal credit file which is carefully scrutinised by lenders.

Lenders look at the credit limit on your credit cards as a liability you may have in the future, even if you don’t currently owe a cent.

Regardless of your personal situation, now was a good time to speak with your mortgage adviser to review your lending and negotiate the best deals on your behalf.

Chris Acret is managing director of Smartline Personal Mortgage Advisers and has been involved with mortgage broking for almost 20 years.