Mortgage discounts stay once secured: Smartline

Complacent mortgage holders who aren’t capitalising on low interest rates and intense lender competition could be costing themselves, according to Smartline Personal Mortgage Advisers.

"Many borrowers are unaware that any discount from the lender’s standard variable rate they secure now will stay with them with that lender in future years," Smartline adviser Michael Karp.

“Working out whether you can get a better deal on your home loan is one of those things that often ends up in people’s ‘too hard’ basket – it’s seen as being a difficult and tedious process,” Mr Karp said.

“In this current environment, the bank might offer you a 0.8% discount off their standard variable rate in the knowledge most people will not ask for more – but a mortgage adviser may well be able to get you something like a 1.0% discount depending on your circumstances.

"Take the example of a $350,000, 30 year loan at an 80% lend.

"The standard variable interest rate on offer is 5.45% and a borrower, who goes direct to their lender, secures a discount of 0.8%, making the rate 4.65%. 

"However, a second borrower uses a mortgage adviser who is able to secure a discount of 1.0% to make the interest rate 4.45%.

"As a result, the second borrower saves a total of $7130 in interest over the life of the loan (if the rate stayed the same)."