Big home loan seekers get the champagne treatment
21/01/2012 
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Home loan seekers looking to borrow big dollars brings champagne treatment from banks, but many battlers wanting to secure a home have to take what they’re given.
While investors can improve their mortgage interest rate by up to 2 per cent through professional packages designed to attract big spenders, first homebuyers are paying thousands of dollars more to secure less competitive rates.
While lenders say the professional packages ensure a good deal for clients, consumer advocates say the low end of the market is being short-changed.
The Herald Sun has found that at the top end of the market, big-borrowing clients can secure lower fees and a better interest rate.
Several major lenders offer a “professional package”, aimed at attracting bigger loans.
The Commonwealth Bank’s Wealth Package means customers borrowing $250,000 get up to 0.7pc off its standard variable rate.
Commonwealth Bank retail products manager Michael Cant said more than half of new loans were under the Wealth Package, which also cuts all fees for the mortgagee.
“The package is very popular across the board, but of course the discount available varies in regard to the size of the loan,” Mr Cant said.
Property investor Con Tsamis bought his ninth portfolio property in January, paying $890,000 for a South Yarra house.
The Commonwealth Bank customer said he was offered a 7.9 per cent interest rate loan, but negotiated the figure down to 7.1 per cent.
“Being an established customer and having several property loans with the bank really gives you negotiating power,” Mr Tsamis said.
Aussie Home Loans also offers better rates for big spenders.
While the standard variable rate is 8.2 per cent, borrowing more than $200,000 takes the figure down to 7.7 per cent.
A $350,000 loan gets a 7.57 per cent rate, while over $500,000 is just 7.5 per cent.
At the other end of the market, Mortgage Buddy offers a 30-year, 105 per cent mortgage with a 9.3 per cent interest rate, while a 106 per cent loan from DIY Loans gets a 8.2 per cent rate.
Sales representative Aaron Lofts bought his $168,000 Sunbury home 12 months ago, borrowing 100 per cent.
While he tried to shop around for the best mortgage deal, he said negotiating for a better rate was impossible.
“When you’re borrowing 100 per cent, and when you’re on a low income, your choice is pretty limited already.”
Aussie Home Loans chairman John Symond admitted that more established buyers were getting a better deal, while high-risk loans were putting low-end buyers under threat.
“The competition for lending has meant some home loan lenders are prepared to lend far more money on far less deposit,” Mr Symond said.
“And young people are taking these terms, but they don’t have a real deposit buffer to weather them through the storm.”
Consumer Law Action Centre chief Carolyn Bond agreed lenders were offering too much to high-risk buyers and demanding interest rates that were too high.
“When people are desperate to break into the market, they think 106 per cent sounds like a good idea,” she said.
“But further down the track, if they are finding it difficult to meet those tough obligations, they end up in trouble.”
Australians for Affordable Housing spokesman David Imber said it was one more example of financial institutions profiting from the housing crisis.
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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