Why we can’t answer… “What’s your best rate?”

The first question anybody wants to ask us is what is your best rate and it seems disingenuous when we literally cannot answer it on the spot, I promise you we are not trying to be difficult or shifty & we would be delighted to throw out a low interest rate, however, what's your best rate depends on who you are - let me explain.

Let's assume by best rate you mean the “cheapest” because frankly that's what matters the most to everybody right? The cheapest rate depends on so many factors, like, the percentage of the value of the property that you're borrowing, the loan value itself, and qualifying criteria for that lender and that loan. SO the cheapest rate may not be available to you if you’re borrowing less – smaller loan size - or higher percentage, or applicable scheme or offer.

Obviously we could quote you an interest rate that's straight out of our books but you're not going to be happy if we have to tell you that you can’t have that rate. That will feel like a pretty sour experience.

What we have to do instead is

·      confirm which lenders are available to you

·      how much you're borrowing

·      which loan is going to suit you

and from that which one has the best rate. Its a lot of work just to quote an interest rate, but it has to be done. Not only is it good business, its mandatory under our licence.

Let me give you an example;

·      Let's say currently the best rate is a fixed rate with a lender who doesn't allow parking any funds, no offset account and no additional repayments allowed – but - you have a big chunk of money that you want to save interest with against that loan. That best rate is still interest you'd have to pay where in another loan which has an offset account or allows redraw you might pay no interest for the equivalent value of that chunk of money. In practical terms that “lowest rate” will cost you more interest than another making it far from best, but we can’t tell you that without diving in to your circumstances.

·      Another example, lets say ABC bank is offering something really smashingly low, but, they only approve clients with these criteria – and that isn’t you, how do you feel being told a rate you can’t have?

·      And a third – lets say best rate is with another bank but the difference is only $40 a month in the repayments – and it will cost you around $1300 to move there because of the fees involved, that best rate will cost you money again.

Bottom line, you may want the snappy answer – and trust me, we want to give it – but we’re also mindful of not rubbing salt in the wound if it’s not something you can have.