How to Negotiate a Better Interest Rate on Your Home Loan

How to Negotiate a Better Interest Rate on Your Home Loan

Are you paying too much interest on your home loan? You’re not alone. Many Australians are unaware that they can negotiate a better interest rate with their bank. In fact, negotiating a better rate can save you thousands of dollars over the life of your loan. Here’s how to do it:

Step 1: Find Out What Interest Rates Are Available

The first step in negotiating a better interest rate is to find out what rates are currently available. You can do this by:

  • Contacting us find out what off-market discounts are being offered. Off-market discounts are discounts that are not advertised and are only available through mortgage brokers.
  • Checking your bank’s website to see what rates they are offering new borrowers. Banks often offer lower rates to new borrowers in order to attract new business.
  • Calling the bank and asking them for their best pricing. This can be a good way to get a sense of what rates are available and what factors will impact your ability to negotiate.

Once you know what rates are available, you can start negotiating with your bank.

Step 2: Maximise Your Discount

To maximise your discount, you need to know what factors will stop your bank from negotiating. These include:

– Owning over 80% of the property value. Banks generally charge higher rates for loans where the borrower owns more than 80% of the property value, as these loans are considered higher risk.
– Having an investment loan or an interest-only loan. Banks also charge higher rates for investment loans and interest-only loans, as these loans are also considered higher risk.
– Being a non-resident or self-employed. Non-residents and self-employed borrowers may also face higher rates due to perceived higher risk.
– Having missed payments on your debts. If you have a history of missed payments on your debts, this may also impact your ability to negotiate a better rate.

However, there are ways around these obstacles. For example, you can borrow under 80% of the property value, switch your investment loan to be a home loan, or consider a fixed rate loan.

Step 3: Negotiate With Your Bank

When it comes to negotiating with your bank, there are different strategies depending on whether you’re a new or existing borrower.

New borrowers should apply with the right bank and play them off against their competitors. Mortgage brokers can help you with this. By applying with the right bank, you can increase your chances of getting a better offer right from the start.

Existing borrowers need to make it clear that they will refinance if they don’t get a good offer. You can call your bank with an offer from a competitor or get a mortgage broker to put in a pricing request for you. By showing your bank that you’re serious about finding a better deal, you may be able to negotiate a better rate.

Step 4: Refinance to a Better Deal

If your bank refuses to give you a good offer, it’s time to break up with them and refinance to a better deal. You can check out the interest rate specials available from our lenders and find out how our mortgage brokers can help you get a better deal. Refinancing can be a good way to save money over the life of your loan, especially if you’re able to find a lower rate or better terms.

Step 5: Keep Your Bank Accountable

Finally, it’s important to monitor your mortgage and challenge the bank every time they mess with your rate. Our mortgage brokers have a team that spends all day repricing loans for existing borrowers and ensuring that they get the same offers as new borrowers. By keeping your bank accountable and challenging them when necessary, you can ensure that you’re always getting the best possible deal on your home loan.

Don’t let your bank take advantage of you. Negotiate a better interest rate on your home loan today!

Book an appointment or email us to negotiate a better interest rate on your home loan today!