Competition for Mortgages

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Handle9

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#164278 4-Feb-2015 07:04

I'm going through the refixing process at the moment. My current bank had offered me a competitive rate for my fixed rate but I did decide that I'd have a look at the market. It's been an excercise which has been well worth wile. I've managed to negotiate from my current bank a $2000 cash payment, a free platinum card for 2 years, and a good fixed rate. I'm waiting to see what discount they will give me on the floating rate.

Interestingly to change I have been offered by another bank $3500 with a similar (0.05% higher) fixed rate and a 0.82% discount on the floating rate. It's certainly worth having a look at what's out there as otherwise you miss out.

The other thing worth considering is what break fees would be on your current fixed mortgage. I had fixed at an excellent rate 2 1/2 years ago fixed for 3 years but now I've gotten a rate which is Better. Because of the way my bank calculate their break fees it's cost me nothing to break the mortgage.

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#1230912 4-Feb-2015 08:08

Break fees depend on a few things, the cost of borrowing for the bank is the main driver, plus how far into the term the customer is. I've seen horrendous break costs, and the bank wouldn't waive them. But definitely play hardball with your own bank and be prepared to move.
Moving is still a PIA despite attempts to smooth the process.

Handsomedan

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#1230917 4-Feb-2015 08:15

Yup - moving can be a great experience financially, but it's often a total balls-up, despite bank protestations to the contrary.

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khull

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#1230919 4-Feb-2015 08:20

By any chance do you work at procurement? :)

Haggling isn't a skill that all people have. I've left it to my broker to sort out - getting a credit card fees waived is easy but I've never had 24 months before

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#1230924 4-Feb-2015 08:32

khull: By any chance do you work at procurement? :)

Haggling isn't a skill that all people have. I've left it to my broker to sort out - getting a credit card fees waived is easy but I've never had 24 months before

The banks are super keen to get people on their premium card products, so will often do deals to entice people.

It's all about the interchange...$$$

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khull

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#1230927 4-Feb-2015 08:34

Anyone know of a bank who will hand me an Amex Platinum Charge Card? ;)

Horseychick

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#1230932 4-Feb-2015 08:42

I agree that the banks are currently chasing business. We had just signed up to a mortgage with Sovereign through a Mortgage Broker with settlement due on 13th Feb. When I told my current bank we were moving our mortgages they got quite grumpy with me. However, they did come back the next day with a very good offer which works out almost $500 per month cheaper so now we are trying to get that all sorted so we can withdraw from the Sovereign offer before settlement. Then the Mortgage Broker will get grumpy no doubt

but its not him paying the mortgage so he will have to get over it.

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#1230934 4-Feb-2015 08:53

Horseychick: I agree that the banks are currently chasing business. We had just signed up to a mortgage with Sovereign through a Mortgage Broker with settlement due on 13th Feb. When I told my current bank we were moving our mortgages they got quite grumpy with me. However, they did come back the next day with a very good offer which works out almost $500 per month cheaper so now we are trying to get that all sorted so we can withdraw from the Sovereign offer before settlement. Then the Mortgage Broker will get grumpy no doubt but its not him paying the mortgage so he will have to get over it.

It begs the question why you didn't try to play your current and new banks off each other PRIOR to signing mortgage papers? Also, on what grounds would you have to cancel the arrangement with your new bank? As a formal legal contract, I'm not sure "I've found a better deal" is going to be an adequate reason.

I'm all for getting the best deal possible - my sister accuses me of being a rates ho (can't spell that one out fully!) - but I wouldn't put myself in this position or expect to get out of it once that contract's signed...

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trig42

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#1230937 4-Feb-2015 09:11

We are just considering whether or not to refinance.

With the increase in Auckland property values over the last three years, we estimate (on evidence of similar sized properties selling around us) that the value of our house (which I believe we got cheap, and have done a bit of work to) has probably increased about 40% on what we paid for it (obviously, would need a valuation, but the bloody GV has gone up 33% - yay more rates!).

We locked in a fixed rate about 18 months ago for 3 years.

We want to spend about $50k (which would be about a third of the increase in the value of the property) on a new room under the house, so I am thinking about shopping round the banks and seeing what my current bank can do (Kiwibank, who I have been happy with). It seems like a pretty good time to go to them (apart from needing the 20% equity still). I might see if they can pay for the valuations (need two as have a rental property in Napier that never changes in value).

Hoping the banks will be nice.

Horseychick

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#1230939 4-Feb-2015 09:16

I agree that the situation we are in is not ideal, and without going into great detail the Xmas holiday period was a large factor in what has happened. However, in any mortgage contract there is a clause saying you can cancel the contract at any time. Our lawyer advises that there may be break fees, but that as the money hasn't been drawn down yet these should be minimal. Our bank is offering a larger cash contribution so we believe these will easily be covered by that.

If the difference in the monthly mortgage payment had been < $100 then we wouldn't bother with trying to change, but at the price we'd be stupid not to at least try.

Handle9

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#1230941 4-Feb-2015 09:19

trig42: We are just considering whether or not to refinance.

With the increase in Auckland property values over the last three years, we estimate (on evidence of similar sized properties selling around us) that the value of our house (which I believe we got cheap, and have done a bit of work to) has probably increased about 40% on what we paid for it (obviously, would need a valuation, but the bloody GV has gone up 33% - yay more rates!).

We locked in a fixed rate about 18 months ago for 3 years.

We want to spend about $50k (which would be about a third of the increase in the value of the property) on a new room under the house, so I am thinking about shopping round the banks and seeing what my current bank can do (Kiwibank, who I have been happy with). It seems like a pretty good time to go to them (apart from needing the 20% equity still). I might see if they can pay for the valuations (need two as have a rental property in Napier that never changes in value).

Hoping the banks will be nice.

I am with Kiwibank and they have been good and willing to negotiate. Just talk to them and don't stop pushing until you get what you want, they know it's competitive out there.

I would say it is highly likely that you won't have a break fee as the break fee for Kiwibank is calculated off the wholesale mortgage rate so you could move if they don't come to the party.

Geektastic

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#1230943 4-Feb-2015 09:24

I'm always amazed how easy it is to get money out of the banks.

We're selling and moving and they agreed via our broker to simply port our existing loans to the new house and gave us a letter approving that for 12 months. I had to do nothing more complex than ring the broker and within 2 weeks I had a letter authorising me to buy a house up to $1,250,000 in value!

Of course we have yet to discuss rates, and we intend to spend much less than that on our new house because it won't also be a business in the way our current one (olive grove & B&B) is, but it's amazing how relaxed they are. There are some conditions in the letter but they are not very challenging.

jonathan18

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#1230944 4-Feb-2015 09:25

Handle9:
trig42: We are just considering whether or not to refinance.

With the increase in Auckland property values over the last three years, we estimate (on evidence of similar sized properties selling around us) that the value of our house (which I believe we got cheap, and have done a bit of work to) has probably increased about 40% on what we paid for it (obviously, would need a valuation, but the bloody GV has gone up 33% - yay more rates!).

We locked in a fixed rate about 18 months ago for 3 years.

We want to spend about $50k (which would be about a third of the increase in the value of the property) on a new room under the house, so I am thinking about shopping round the banks and seeing what my current bank can do (Kiwibank, who I have been happy with). It seems like a pretty good time to go to them (apart from needing the 20% equity still). I might see if they can pay for the valuations (need two as have a rental property in Napier that never changes in value).

Hoping the banks will be nice.

I am with Kiwibank and they have been good and willing to negotiate. Just talk to them and don't stop pushing until you get what you want, they know it's competitive out there.

I would say it is highly likely that you won't have a break fee as the break fee for Kiwibank is calculated off the wholesale mortgage rate so you could move if they don't come to the party.

I'd agree re Kiwibank's flexibility when it comes to keeping its customers - I've broken mortgages with Kiwibank to refix them at more competitive rates (with the same bank), and the break fees have been minimal or totally acceptable (relative to the eventual savings). Mind you, this did come after I mentioned the deals being offered to me by another bank.

One thing they don't offer is a decent credit card, though (and their savings accounts don't offer great interest), so at this point they'll never provide all our banking needs.

Is it still correct that Kiwibank don't make their services available to mortgage brokers?

Handle9

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#1230985 4-Feb-2015 10:11

jonathan18: I'd agree re Kiwibank's flexibility when it comes to keeping its customers - I've broken mortgages with Kiwibank to refix them at more competitive rates (with the same bank), and the break fees have been minimal or totally acceptable (relative to the eventual savings). Mind you, this did come after I mentioned the deals being offered to me by another bank.

One thing they don't offer is a decent credit card, though (and their savings accounts don't offer great interest), so at this point they'll never provide all our banking needs.

Is it still correct that Kiwibank don't make their services available to mortgage brokers?

I don't know about Kiwibank and brokers, my experience is they aren't really much use and only deal with certain banks.

nzkiwiman

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#1231172 4-Feb-2015 15:34

I don't own a house, and have never chased a mortgage
Just wondering why all these banks are now giving you $1-2-3k for taking out the mortgage. I assume that you can't turn around the use that money as a payment - they probably expect you to spend it on something you don't need.

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#1231182 4-Feb-2015 15:39

nzkiwiman: I don't own a house, and have never chased a mortgage
Just wondering why all these banks are now giving you $1-2-3k for taking out the mortgage. I assume that you can't turn around the use that money as a payment - they probably expect you to spend it on something you don't need.

You're more than welcome to use the money on the mortgage, and I would highly recommend you do so. The more you pay in the first years of the mortgage the less overall interest your pay over the term.

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