Could you get a better deal from your bank?

Property owners are being reminded that it’s worth checking to see if they qualify for an interest rate special from their banks.

Thursday, November 27th 2014, 12:00AM

by Susan Edmunds

The big banks are offering advertised specials to borrowers with more than 20% deposit.

The release of new CVs in Auckland shows average property value increases of 29% across the city from 2011-2014.

That means even those who bought property with a small deposit in those years will now likely have equity of at least 20%, entitling them to better interest rate deals, as well as added sweeteners that are on offer, such as big-screen TVs and Playstations.

The difference could be significant: If you're paying a standard rate of 6.39% on a $500,000 loan you'll fork out $3695 a month. If you can qualify for the special 5.75%, you will spend only $3510.

At Westpac and BNZ, low-equity borrowers are charged a premium on top of standard interest rates, which can add up to an extra 1.75 percentage points.

If borrowers can show their equity has grown, the margin can be lifted. Westpac refused to say how many customers were paying low-equity margins or whether they would be contacted to assess that. BNZ said customers would need a “credit event” to reclassify their LVR position and have their low-equity margin removed. “LVR is reassessed when a credit event occurs. A credit event is typically an application for or approval of new or additional lending.”

Broker Kris Pedersen said all the banks were fighting hard for business. “You get what’s going out publicly in their marketing and then behind the scenes they are extremely aggressive, fighting over business.”

Another, Glen McLeod, said he had been able to negotiate a $8000 cash contribution, 1% off floating rates for big loans, 0.8% off floating rates for loans about $750,000 for customers.

Some customers had been asked if they would like to take the chance to borrow more money.

A BNZ spokeswoman said the CV increase would present opportunities for some customers to use their increased equity to renovate or make improvements.

ANZ sent customers a letter saying: “Because you’re making good progress repaying your ANZ Home Loan, you can choose to get a little extra if you need it.”

They were then offered the option of a home loan top up or a reduction in mortgage payments.

A spokesman said: “From time to time we contact customers whose repayments are ahead of schedule, or who have built up equity, with new lending options specific to their situation.”

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