Recent Canstar data shows that in the past 12 months only 4% of kiwis have changed banks. So, either, 96% of us feel our current bank is providing us with the customer service and range of services we feel we deserve, or we’re just a little lazy.
Of course, there may be other reasons why we’re not switching – like the fact that we have a mortgage with a bank and switching right now could mean having to pay breaking fees to the current bank.
But it might still be worth doing just that if it gives you a better deal at another bank.
So, here are some reasons why switching banks might be worth your while.
Better interest rates
In the greater scheme of things, moving banks for a better mortgage rate isn’t necessarily a compelling reason in and of itself. Though, depending on which bank you’re at, this could contribute to a saving of around 2k over a 1 year period.*
Cash back offer
A more compelling reason to switch would be a decent cashback offer from the new bank. Some banks are currently offering a 1% cash back (though this varies by bank) which could offer a bigger cash injection than quibbling over interest rates.
Unlock lending for a property
Different banks use different criteria when assessing you for a home loan. So, whether you’re looking to buy your first home or an investment property, it pays to look around for the bank that offers you the best lending position.
Remove your home from a cross-secured loan
If you bought an investment property previously and cross-secured your home with it, you may now want to ‘unencumber’ your home. This is often easier to achieve by switching to another bank.
Wanting to restructure your home loan in other ways
Or, you may be wanting to restructure your home loan in other ways. Like extending the term of your mortgage or negotiating interest-only terms. Again, this tends to be easier to negotiate with a new bank, rather than your current one.
Anything to consider before making the move?
Before you make any decisions, you do want to understand the implications of making that move. When it comes to switching banks when there are mortgages involved the two big ones are the cost of moving – and whether this will outweigh any of the benefits of switching – and whether the new bank will insist on cross-securing assets that you don’t want cross-secured.
If you’re considering switching banks and are wondering whether it’s the right choice for your circumstances, come and have a chat with an enable.me coach today. They’ll be able to assess your current financial situation and help you identify where there are benefits to switching to another bank, or whether you’re better off sticking with the one you’ve got. Book your consultation here. (A fee applies).
*Difference between 1-year rates between ANZ (5.45%) & Kiwibank (4.95%) with a mortgage of 600,000 over a 30-year term. Total yearly cost for ANZ = $40,638, for Kiwibank = $38,402. Current as at 28.09.2022.
Disclaimer: This blog post is for informational purposes only and does not constitute individual financial advice. If you’re interested in receiving personalised financial advice, you can book in a consultation with an enable.me coach. Costs apply.