Refinancing Vs Negotiating With Your Bank

The Benefits of Refinancing: Why It's Better Than Negotiating a Lower Rate with Your Existing Bank

As a homeowners seeking to lower your mortgage interest rate, you often face the decision of Refinancing Vs Negotiating With Your Bank. While negotiating with your current bank may seem convenient, refinancing offers several advantages that make it a more favorable option. In this article, we will explore why refinancing is often a better choice than negotiating a lower rate with your existing bank in the context of Australian home loans.

The first thing to note, is that when you go back to your existing lender or bank and negotiate a better rate, they are just acting in a 'reactionary way' to your request. They will look up many factors including; their current loan book, how many new clients they have acquired that month, what interest rates are, what they are offering to NEW customers and then evaluate if you are worth it or not. Also it is important to note that they are only doing this because you approached them. They are never reaching out to you to proactively do this. Something a mortgage broker would proactively do on your behalf.

Refinancing to a NEW lender via a mortgage broker will allow you to access new-customer interest rates, potential cashback offers (up to $5,000 at the time of writing this) and you engage the lifelong services of a mortgage broker. It will now be in your mortgage broker's best interest to continually be proactive about ensuring you are always on the best interest rate.

1. Access to Competitive Rates

One of the significant advantages of refinancing is the opportunity to access competitive interest rates. When you refinance your home loan, you have the freedom to explore the rates and loan terms offered by various lenders in the market. Different financial institutions may have more attractive rates and packages compared to your existing bank. By widening your options, you increase the likelihood of securing a lower interest rate, potentially saving thousands of dollars over the life of your loan.

2. Tailored Loan Features and Options

Refinancing allows you to reassess your financial goals and select a loan that aligns with your needs. Different lenders offer a range of loan features and options, including flexible repayment terms, offset accounts, redraw facilities, and fixed or variable interest rates. By refinancing, you can choose a loan that better suits your preferences and financial circumstances, providing you with greater control over your mortgage.

3. Debt Consolidation Opportunities

Refinancing can also provide an opportunity for debt consolidation. If you have multiple debts, such as credit cards, personal loans, or car loans, refinancing allows you to consolidate these debts into your home loan. By combining your debts, you simplify your finances and potentially benefit from a lower overall interest rate. This consolidation can result in lower monthly repayments and may help you pay off your debts sooner.

4. Fresh Start with a New Relationship

Refinancing your home loan offers the chance to establish a new relationship with a different lender. If you have experienced unsatisfactory customer service or encountered limitations with your current bank, refinancing allows you to find a lender that aligns better with your expectations. Researching customer reviews and recommendations can help you choose a lender that values your business and offers excellent service throughout your loan term.

5. Take Advantage of Introductory Offers

When refinancing, you may also have the opportunity to take advantage of introductory offers or promotional deals offered by new lenders. These offers can include discounted interest rates for an initial period, fee waivers, or other incentives. By capitalising on these benefits, you can enjoy short-term financial advantages while potentially saving money in the long run.

6. Flexibility in Loan Structure

Refinancing provides you with the flexibility to adjust your loan structure according to your changing circumstances. Whether you want to increase or decrease your loan term, adjust your repayment frequency, or switch between fixed and variable interest rates, refinancing allows you to make these modifications to suit your financial goals. This adaptability ensures that your mortgage remains suitable as your needs evolve over time.

7. Stimulate Competition and Negotiation

By exploring refinancing options, you introduce competition into the market. When lenders compete for your business, you have the opportunity to negotiate better terms, rates, and fees. This competition empowers you as a borrower, allowing you to secure the most favorable loan package available. Negotiating with your existing bank may not have the same level of leverage, as they may be less inclined to offer competitive rates when they know you are not actively considering other options.

While negotiating a lower rate with your existing bank may seem like the path of least resistance, refinancing with a mortgage broker offers substantial advantages that make it worth it in the long run.

Still tossing up Refinancing Vs Negotiating With Your Bank? Speak with a mortgage broker cost and obligation free today >