Banks are more likely to offer lower interest rates to borrowers with more equity or larger deposits, RNZ money correspondent Susan Edmunds says. Photo: Unsplash/ Declan Sun
Q: Why do banks offer better interest rates to some people than others? A friend just got hers fixed for super low but they wouldn't do the same for us (same bank). What are the best ways to get lower mortgage rates?
Email your questions to: susan.edmunds@rnz.co.nz
A: There are a few reasons why one person might be able to get a better home loan rate than someone else, or a larger cashback. Here are a few of them:
- Equity: If you have a larger deposit or more equity in your property, that can make a difference to the rate you're offered. Most of the big banks have "special" rates that are only available to people who have 20 percent deposit or equity.
- The size of your loan: Generally, it's easier to negotiate if you're bringing a lot of business to the bank, so if you have a big loan or a number of them, you might be able to get a better rate.
- Whether you ask: This might seem like a simple one but you do sometimes have to ask whether you can get a better rate. If you have a mortgage adviser, they'll usually handle this for you. Sometimes, banks want a screenshot of a competitor's offer if you're asking them to match it.
- The lending environment: Sometimes, banks just have more room to move. If you're trying to get a better rate in a time when their advertised rates don't have a lot of margin in them, you'll probably have less success than if you were to try when rates were about to move, anyway.
Q: As a New Zealand pensioner with an overseas pension I'm receiving only part of my New Zealand pension. Does MSD take into account that the overseas pension is already taxed?
A: The Ministry of Social Development referred your question to Inland Revenue, which said it would depend on which country your pension is coming from.
If you are receiving a pension from a country with which the country has a double-taxation agreement, then how your pension is treated would depend on the terms of the agreement.
You can look at the terms of the various agreements here.
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