6 October 2017

Often clients come to us asking to refinance them from their existing lenders.  While there are good reasons for changing, caution needs to be taken and it needs to be identified if the change will actually reap a benefit.  Here are some examples of how changing can provide an advantage .

  1. The existing lender is unable to comply with your request eg an increase in  lending, change the terms of the loan or take loan repayment holidays etc. There may be good reasons why the lender is unable to assist and it may even be in the client’s best interest and if so then it would be wise for the client to reconsider.  But often we find the reasons why lenders are unable to help are due to their policy.  If the pros in changing outweigh the cons then we believe that it is the client that needs to control their own financial destiny and as such would recommend a changing. 


  1. There is a better deal with another lender.  Most people generally think that their lender is not offering them the best deal but if push comes to shove their existing lender may price the loan to compete with the other offers out there.  If they don’t and the savings are significant then a change to another lender again may be warranted.


  1. Relationships have broken down between client and their banker.  Before changing though you could  explore other options such as  being assigned to another banker or working through the  issues with the banker in question – often relationships worked through sticky issues end up being the strongest ones. 


  1. Different loans products.  We have seen some pretty weird and wonderful different types of loans over the years.  While it’s good to challenge your thinking and question if a certain product could provide a benefit to you it should be done with caution & research.  An example of this can be seen in the Revolving credit which came on to the market in the 1980s.  Some Debt reduction agencies decided to market this as the best way to pay off your mortgage in the shortest period of time.  People paid thousands to set themselves up on this product only to find that it did not suit them and in fact made things a lot worse.  Then to add insult to injury they found out that their existing bank could have offered that product if they’d only asked.  We recommend going with a lender that has a range of products so if the one that you are wanting to try out doesn’t work for you, you can revert to another type. 


There is always a disadvantage in changing and that is the inconvenience of doing so, but there isn’t always an advantage in changing.  We recommend annual reviews with an independent financial adviser such as a mortgage broker as being the best way to keep up to date with different products, lenders and offers.  A mortgage broker is able to point out the pros and cons of the options and together advise you if changing lenders is going to be worthwhile to you and if not avoid what could be quite a costly mistake.  

Published In The Whakatane Beacon

This post was written by

Trish Marsden - who has written 96 posts

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