Scott Pape, aka the ‘Barefoot Investor’ recently sent an email to his tribe with the subject line: “The 4 cheapest home loans on the market in June.”
You can read snippets of it in this article at Yahoo Finance.
Before we go any further, let’s get one thing clear. I’m a Barefoot convert and a big fan of Scott’s teachings. Here’s the proof (you’ll understand if you’ve read the book):
But back to the email.
There are 3 really important things about his email.
- He actually only got 2 out of the 4 cheapest home loans right. There’s a good reason he didn’t quite get 100% right, which I’ll get into shortly…
- He makes reference to his ‘$22,064 phone call’ script which could actually be more than that depending on your circumstances.
- And he makes an extremely telling point that, “These rates are generally only for eligible borrowers.”
Let’s get into each of these in a bit more detail.
Point number 1…
It’s not Scott’s fault that he only got 2 out of 4 right when it comes to the cheapest home loan rates.
The real reason he didn’t get them all right is because it’s way more complicated and way more time consuming than it should be for people to find their best deal.
We’ve been building this capability at uno for the last 3 years and we don’t even have 100% of the market covered.
The difference with uno is you can scan the market in seconds rather than days or weeks…
Which brings me to:
Point number 3…
(I’ll come back to 2 in a minute because it’s super important.)
Even though 2 of those 4 deals are some of the cheapest in the market, that actually means nothing in relation to your personal circumstances.
Scott’s point is this, and it’s a very good one:
“These rates are generally only for eligible borrowers.”
See, it doesn’t matter what ‘THE’ lowest home loan interest rate is. It only matters what ‘YOUR’ lowest interest rate is.
Your address, your income, the number of dependants you have and the current deal you have with your current lender are all different to the person next to you and all impact your eligibility for specific deals.
So, even though we have interest rates right now from under 3% you should take that with a grain of salt until you find out ‘YOUR’ best rate because your best rate could be very different to ‘The’ best rate.
This is one of the reasons comparison sites are finally getting a bad name. Comparison sites show low interest rates and sell your clicks to the highest bidder, even though that click may be a complete waste of your precious time, because the rate is simply irrelevant to you based on the lender’s eligibility requirements…
This is also the reason the ACCC absolutely smashed lenders late last year when its key finding from this independent report ‘Residential mortgage price inquiry – Final report’ stated that:
“Opaque discretionary pricing inflates borrowers’ costs (including their time and effort) to discover better offers.”
So, forget about headline rates but definitely monitor your personal situation and be on the lookout for a better deal.
You can do this for free using a tool called loanScore. Try it here.
Let’s finish up with point number 2. The ‘$22,064 phone call’ script.
Point number 2…
It’s a great script and if you like being the negotiator you should try it, but as Scott says, it’s a “well-worn script”.
On top of that, we found that 50% of the 1500 mortgage holders we surveyed recently were afraid to discuss their finances with their bank or broker.
So, if you’re the type of person who would prefer to leave the negotiating to the professionals then we’re happy to make the call for you.
Because we’re dealing with lenders every day we not only know the price they offer customers but the price they don’t tell customers about … (remember the ‘discretionary pricing’ I mentioned above?)
You have to know when you can ask for it and how much you can ask for.
Some lenders offer it and some don’t. We’ll keep them honest for you and give you your best chance of getting a great deal!
All you need to do is:
- Get your loanScore to find out if you’re paying too much for your current loan – If you’re on a great deal already then well done! But remember, a good home loan today might be a bad home loan tomorrow. It all depends on what’s out there in the market for you. (you can set a savings threshold for when you’d like to be alerted to a better deal)
- See if you can save money with your existing lender or if it’s worth your while switching to a new lender
- Let us know if you’d like our help with either of those options and we’ll get the ball rolling for you.
The good part is, it’s all free…
Get your loanScore now and find out if you’re paying too much for your home loan.