Does It Pay To Be Bank Loyal?
Decades ago, bank loyalty would pay off when it came to moving forward on a home purchase or buying a business or getting a better interest rate. The days of you and your partner donning your Sunday best, and being early for your meeting with the bank manager, to hopefully get a wink and a deal sealing handshake, are well and truly gone. The question now, though, is, is bank loyalty now dead in the water? Or does it still pay?
A time ago, when you had sat in that all critical meeting, the only way to check your creditworthiness was manual calls to your employer, any transactional history you had with the new bank, and the manager’s opinion of you. While I know, I am over exaggerating now. It was pretty close to that. Things have moved on in leaps and bound since then and with the recent advent of fully comprehensive credit reporting. Now lenders have so much information on you at their fingertips that it is easy for them to make a decision on your finance and to categorize you as a good or bad client to have. No more having to schmooze the bank manager. The good news about all of this is that if you are categorized as a great client from a comprehensive credit reporting standard, lenders could be vying for your business soon. It is still a good idea when applying for finance to a lender to find the one that will suit your needs and make sure that you present your information in the best possible light. This is where having a good finance broker in your corner could prove invaluable. The Best brokers do all the heavy lifting when it comes to helping you find a lender that will suit your needs as well as making sure you present your self with regards to documentation as best you can. If you need brilliant brokers, Castle Mortgages are a finance brokerage based in Adelaide who would love to assist you.
So if getting the initial finance, or subsequent loans for a business or the like is not dependent on your relationship or loyalty to a lender, where else may bank loyalty pay? Many clients of mine initially thought that the “special” interest rate they were getting from there bank was because of their loyalty and their special relationship with there branch. That has been debunked though most recently by the RBA, stating that bank loyal clients were often paying higher interest rates than new to bank clients.
“The RBA has stated that homeowners with variable-rate mortgages four years or more old are being charged an interest rate 40 basis points (0.4%) higher than borrowers with new loans. ‘For a loan balance of $250,000, this difference implies an extra $1,000 in interest payments per year,’ the RBA noted.”
In my experience even when bank loyal clients go and ask for a discount on their Home Loan, they are met with a flat no, or they get a discount but as it is not written in stone on a new loan contract the lender often pushes it upon them a little way down the track. This can be where being new to bank clients at another lender can substantially save you money on your mortgage. Having a Mortgage broker that has no bias towards a lender assess your situation and potentially come up with a few money-saving options would probably be a good move. Castle Mortgages based in Adelaide are Mortgage brokers who pride themselves on service and being able to save there clients money. If you would like to look at your options, please get in touch today.
In essence, make sure you are a good client when it comes to your credit score, by paying your bills on time and conducting yourself responsibly when it comes to managing finances. By doing that you will be a preferred client to lenders in the future, enabling you to secure the best rates and the finance you need.
Castle Mortgages are Mortgage brokers from Adelaide, this blog is in no way meant to be taken as advice and is general in nature. Everyone’s circumstances are different, and you should seek independent financial advice for your specific scenario. If you are looking for excellent brokers to structure your finance in South Australia, Castle Mortgages could be your brokers.