If Part 1 was the inside intel on how to become Credit Unicorn, consider Part 2 of our 3 Part Series the down-low on the ingredients you need to cook yourself up a killer home loan deal, ingredients Colonel Sanders surely would have trademarked if only chicken hadn’t captured his attention first.
Why do you want a better deal? Simple. Paying interest sucks! So get out your notepad, and add these steps to your home loan shopping list.
Step 1: Stand in the shoes of a home loan assessor.
Why do we want to do this? Well knowledge is power and just like a job interview, you want to know what an assessor is looking at when he/she processes your application. If you know, then you have a much better chance of getting the job! Below is an example of an assessor’s notes for a home loan application.
Proposed 500K loan over 900K (LVR 56%) security to refinance CBA owner-occupied home loan. Perfect repayment history on CBA loan. Credit Score 833 and clear credit history. CBA credit card to remain in place, 5K limit, balance cleared monthly. PAYG 3.5yrs base income $100K. DTI 5.05x. Security in Camp Hill QLD 4152, 4bed 2bath 405sqm land. All aspects within policy, low risk and approved.
Step 2: Research the best deals available in the market
With record low interest rates on offer right now, the market is offering some K.I.L.L.E.R deals on home loans. So if you’re looking to finance, or re-finance a home loan secured by your own home, paying Principal & Interest and under 80% LVR, make hay while the sun shines.
Step 3: Bitch with your bank
Now, we love a bit of Barefoot Investor, so we’re going to borrow the script from his book but with a little additional ammunition 💣
Use this if you’re refinancing, or re-jig it if you’re just looking to get a great home loan from your current bank.
You: Hello, my account number is ________ . I’ve been with your bank for __ years, but I’ve applied to refinance with loans.com.au. Their rate is 3.03% which is __ % cheaper than what you’re charging me. Given our long standing relationship, I’d like you to match the offer or send me the discharge forms I need to switch.
Bank rep: One moment, please.
(You’re bluffing, of course. However, the bank’s sales team have strict targets that they have to meet — one of which is giving profitable customers discounts to stop them leaving.)
Bank rep: We can’t match the rate you have quoted. However, we understand you are a valuable customer, so we would like to offer you a 0.15% discount.
You: That’s not good enough. I’ve already got conditional approval… so in order to stay I need you to match the discount.
(Now this is where you get into full character as per Step 1. This is where you show the Bank that you know your stuff!!!)
You: Here’s the thing.
My LVR is __ %. I have a perfect repayment history with you. My credit score is ____ .
I’ve been in my job for years with a base income of $.
I calculated that my DTI is __ x.
I have security in Suburb, State, PostCode, and the house has __ bed(s), __ bath(s) and ___ sqm land.
I’d walk into any lender and they would want my business. Could you please speak to your supervisor? I’m happy to wait.
Bank rep (a full six minutes later): On reviewing your case, we can match that rate.
You: Brilliant! Please send me an email confirming the new rate and confirming that it will be applied as of start of business tomorrow.
(Negotiating is best done in conversation over the phone as it creates more urgency. However you could mould the above into an email request with your banker. Remember that you won’t get unless you ask!!)
Step 4: Switch (if Step 3 didn’t work)
If that didn’t work, then unfortunately it’s time to switch. A home loan broker is a great way to review your options going forward, but some of the deals the online lenders offer are pretty damn good, if you want to do it yourself.
That’s it…for now
While Credit Unicorns have great leverage in these conversations, even if you are not one just yet, I’d encourage you to still have a crack at negotiating a better home loan deal. Just speak to what your current strengths are.
FYI: To see how this all fits together with my grand plan to make Australia a nation of Credit Unicorns and Expert Ninja Negotiators, check out my soon to launch startup Cwedit, and join the waitlist.
Loved upping your smarts in this article? Check out Part 1 of this series: Are You A Credit Unicorn? How To Find Out If You’re The Grand Poobah Of Borrowers and keep upping your credit game 🏓