Why you should never give up on mortgage discounts

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VALAY Shah is a great example of how it pays to never give up chasing a better deal on your mortgage.

After his request for a lower interest rate on his home loan was denied by his own bank, he headed online and found a mortgage broker who negotiated a $200 monthly saving from the same bank that rejected him first time.

The extra savings on my home loan means a lot for me and my family, says Mr Shah, whose home loan interest rate was cut from 4.54 per cent to 4.09 per cent.

Some of that additional money I am putting back into my home loan so I can pay off the loan sooner, and the rest goes into a savings account for my sons higher education.

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Mr Shah used online marketplace HashChing, which connects borrowers to highly-rated mortgage broker in their area.

It says borrowers on average are paying half a per cent more using the big banks rather than brokers or other providers.

Co-founder and CEO Mandeep Sodhi says much of the major banks profit comes from borrowers who have a set-and-forget mentality and are not refinancing their loans to a lower rate.

He says negotiated interest rates can be as much as 1 per cent lower than what the banks advertise. Over the life of the loan, this can save customers tens of thousands of dollars.

Mr Sodhi says Mr Shahs initial attempt at getting a lower rate did not succeed because he didnt know what other lenders were offering.

The mortgage broker called Valays bank and threatened to switch Valay to a different lender if they didnt match the competitor lender offer. Valays bank realised they would lose one of its premium customers if they didnt match, he says.

It literally pays to be persistent.

Shahs advice for other borrowers is to do their homework.

You should know what your current rate is, and regularly research online for better rates, he says.

Speak to your bank or lender, and if you cant get a better deal from them, then be ready to move to a different provider.