iRefi Insider School – Interest Rates

 

Let’s talk about mortgage interest rates.

So, maybe your refix is coming up, or you’re going to buy a new property, or you’re keen to see what the interest rates are for mortgages at the moment. Well, what you got to understand is the rates that are on interest.co.nz, or Mortgagerates, or the things that you see on billboards, or TV, or radio ads, those interest rates are not always the interest rates that you’re going to be offered.

Interest rates vary for a lot of different reasons between banks and even at the same bank for many different reasons like what’s your LVR, where is your property, how much your mortgage is. There’s a bunch of things that come into play when you’re trying to negotiate the best interest rates that you can. And, generally speaking, when you’re dealing with a bank directly, what they’re going to do is offer you maybe a small discount or the carded rates and they will hope that you will just accept that directly working with them without a mortgage advisor.

What you should know is that when you work with a mortgage advisor or a mortgage broker, it’s actually a free service and we can help you negotiate better rates for a refix at your current bank and give you an indication of what interest rates and mortgage options you’re going to get with other banks. And, because mortgage advisors, especially the bigger ones working with very large volumes of mortgages all day, every day, we’re able to see what the pricing information is between all of the banks in real time.

You’ve got to understand that week by week the interest rates are changing all the time and demand from each of the banks for all those, especially premium clients, banks will come in and out of the market. So, making sure that you get the best deal, you really got to work with an experienced and also a mortgage advisor that has good volumes in play.

Above and beyond just making sure you get the best rates, you’ve got to take into account, “Okay, is what I see what I get?” And we cover that. Interest rates that are being advertised are, generally speaking, not the lowest that you’re going to be able to get. And, what bank is best for you. So, if you’re already with a bank and you think, “I just want to get the best deal at my bank,” you got to understand that by refixing at your current bank and not moving, you potentially are missing out on a better offer somewhere.

Now, you shouldn’t just move for the sake of moving. If you can get a good enough deal without shifting and you don’t have to go through the process of changing banks, you got to understand changing banks is relatively easy but there’s still a bit of time involved. You got to talk with your lawyer and open the new bank accounts and the incentive needs to be there.

So, if you’re going to get a $3000, $4000, $5000 benefit of switching then maybe you want to take that option more seriously. But, what you got to do is understand what is the bank that’s best for you. And, the bank that’s best for you is going to be dependent on what sort of rewards points you want on your credit card and what sort of bank products you want to use like revolving credits or offset accounts. Whether you want the ability to do redraw or have your family savings all in one place.

There’s a bunch of different things you need to consider. And, if you just take the face value of choosing a bank based on the rates, that’s probably not the best way to go about it. And, banks, you know, the will try and entice you with a better offer but you got to take into account that mortgages are, you know, a 5, 10, 20, 30-year proposition, and you got to find the bank that’s probably going to be with you for that time.

You might be with a bank for 10 years so it’s an important decision to make. And, generally speaking, what we will do is say, “Hey, chose a bank that fits your future goals.” So, you might be buying your first place but you think, “I want to buy another property in two years’ time,” what do you think is going to be the bank that’s going to allow for maximum borrowing power? What do you think the bank’s going to be best for, maybe you’re self-employed, that’s going to allow me to use my projected financials, for example?

Things like that, that when you work with a mortgage advisor, you talk about your future goals, you don’t have to be worried about saying anything that might get you in, you know, in trouble with the banks. You can, you know, talk in confidence with a mortgage advisor. Now, bear in mind if you say, “Hey, look, my wife’s pregnant, 30 weeks pregnant, can we not tell the bank?” We can’t not tell a bank.

We got to have fully disclose things that are important for the bank to know, but there’s things like, “Hey, my parents are going to stop working and they guaranteed the property and we need to get all this done,” and like there’s a lot of different things that come into play with mortgages and, you know, when you work with a mortgage advisor, you just…until you do, you don’t know what you’re missing out on.

When it comes to interest rates, don’t rely on what’s being advertised, talk to, if you’ve got friends, or family, or ex-colleagues that are mortgage advisors, talk to them about what they’re seeing and then, you know, maybe talk to one of the iRefi mortgage advisors about refixing, or refinancing, or new purchases, or just about your future goals.