I hate fees. I hate them more than anything. Anyone in the position of charging you a fee will justify it in many ways, I however just see it as thinly veiled bureaucracy that treats the consumer like an idiot.
For instance, if you decide to make a lump sum payment on your mortgage, some lenders will require you to pay a fee for the privilege. What kind of message is this sending? It is saying, don’t try and lower your mortgage term, otherwise we will charge you. Not exactly a friendly message is it? Rude to say the least.
But what if I told you that you can negotiate ANY rates on your mortgage or home loan?
Yes, I am talking that huge list of fees that you were given by your bank on signing up to your mortgage (or perhaps you are about to sign up).
You can dispute the fees
Most processes are highly automated these days, requiring little human involvement. This is how many lenders afford to keep their rates low, though it is also a thinly disguised way for lenders of all types to justify fees.
Don’t like the fact you have a monthly service fee? Tell your lender. Tell them you are thinking of leaving because it just doesn’t seem fair. Use an interest calculator online and tell them the amount of money you will waste JUST through monthly charges. They are already making money off the interest, why do they need another monthly charge?
Like many things, consumers don’t believe they have a right to voice themselves. Most people think “this is just the requirements of being lent money” – well that is rubbish. Like anything in life, threaten (politely) to leave and you watch how flexible these fees become.
Fees on external valuers & legal firms
Most lenders will have a preferred valuer and legal firm to handle their settlements and new loans. Often these firms work on bulk discounts because of their strong relation to the said home loan lender.
This is an easy way for lenders to mark up the costs and make a small profit. Many lenders will charge full prices for the legal services when really it is likely costing them much less. Dispute the costs with your lender and tell them to itemise their hourly work for the settlement.
Also note that the legal work and valuation is done not only as a process by which you get lent money, it is also a service to protect the lenders. Tell them this.
Ongoing or service fees
Does your lender charge you monthly fees? Ongoing fees? Account servicing fees? This is absolute rubbish. Most payment processes are completely automated so these costs are highly unjustified. Ask your lender what the fee is for and request that this fee be dropped immediately or you will refinance with another institution.
Notes before engaging your lender
It is very important you read these before engaging / discussing the above with your lender.
- There are sometimes cases of legitimate fees. Don’t ever accuse, just question – you will get a better response.
- Your lender may tell you ‘well this is what you signed up for’. Tell them that you signed up for an honest deal and to be treated with respect – two things that are not apparent in your current loan.
- Try to avoid fees BEFORE you get the mortgage. Use it as a bargaining tool for getting a loan. If they offer you a loan, tell them that you would like to go with them, though you are unwilling to pay fees X, Y and Z.
- Never put your fees into your mortgage. They accumulate with interest and even a small fee of $100 can add up to $1000’s over your lifetime.
- Always be polite. You will get much further in life if you can discuss this politely and treat the person on the other end of the phone with respect. It isn’t them that decided on the fee’s, it is the lender in general.