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ISCOVER
Staff Reporter
In a bid to reward customers for their loyalty, one lender has revamped its loyalty loan.
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Yesterday, Nationalcorp announced it would pay money back into the customer’s account each quarter as part of the Loyalty Loan package, reducing their home loan balance and helping them pay off their home loan sooner.
“With the current climate of people refinancing every four years or so, I just want to reward customers for their loyalty,” Nationalcorp’s managing director Barry Parker said.
Loyalty customers receive a 0.5 per cent pa rebate paid quarterly into their loan account for the first five years.
During this time there is also a 0.25 per cent pa bonus accruing for them to be paid into their loan account as a lump sum after five years, to reward them for their loyalty.
After five years the customer’s interest rate is reduced by 0.84 per cent pa, however they maintain the previous repayment level so they will continue to pay off the loan at a faster rate.
The loyalty program not only helps borrowers pay their home loan off sooner, but it also discourages them from refinancing, according to Mr Parker.
“The average home loan is only 4.1 years, and when customers extend their loan term to 30 years each time, they just get further and further away from their goal of owning their home outright,” he said.
“Chasing cheap rates will only benefit a customer in the short term. If they keep refinancing, one day they will be faced with retirement and have 20 or more years left to run on their home loan.”
