If your home loan repayments feel like they'll never end, the solution might be as simple as negotiating a lower interest rate. Regularly reviewing your home loan is essential to ensure you're always getting the best rate available.
Discover our 5-step guide on how to negotiate a lower interest rate on your home loan. Learn practical tips and strategies to potentially reduce your repayments and save money. Don’t miss out on the opportunity to secure a better deal on your mortgage!
1. Ask for the Same Rate New Customers Get
Don't hesitate to contact your lender and ask for a better deal. Approach the conversation with confidence and request the same rate offered to new customers. Many lenders are willing to negotiate in order to retain loyal clients, especially if you have a strong repayment history.
If you’ve maintained a good credit record and consistently paid off your home loan for several years without missed repayments, you could be in a prime position to negotiate.
Reach out to your lender and discuss lowering your interest rate – you may be surprised at how willing they are to offer you a better deal.
2. Do Your Research
Before approaching your lender about lowering your interest rate, take the time to research what rates other lenders are offering for your situation.
By showing your lender that you’re aware of more competitive rates, you create a strong case for requesting a lower interest rate. This knowledge can be a powerful bargaining chip when negotiating with your current lender.
However, it's also a good idea to shop around. If your lender is unwilling to offer you a better rate, refinancing with another lender might be the best option. Which brings us to the next step...
3. Be Prepared to Walk
When negotiating, always be prepared to walk away. If your lender refuses to offer a competitive rate, don’t hesitate to consider refinancing with a new provider. The process may seem daunting, but switching lenders could result in significant savings over time.
4. Play the Loyalty Card
Leverage your loyalty as a powerful bargaining tool. Many borrowers stay with the same lender for years, and if you’ve maintained a positive history with them, it can work in your favour when negotiating a lower rate.
Before you ask for a reduction, take a moment to review your financial position. Ensure that you've consistently made your repayments on time and that your Loan to Value Ratio (LVR) has been gradually decreasing.
This will provide you with a clear timeline of your loyalty and proof of your reliability as a customer—key factors that can strengthen your position when requesting a better deal.
5. Make Sure You're the Ideal Borrower
To give yourself the best chance of securing a lower interest rate, aim to be the type of borrower lenders love to lend to. Before offering you a rate, lenders assess several key factors.
Lenders prefer borrowers who have:
A low Loan to Value Ratio (LVR) – An LVR above 80% can make it harder to negotiate.
A good credit score
No missed repayments or defaults
Steady employment
On the flip side, be aware of factors that may hinder your negotiations, such as:
Your customer profile (e.g., self-employed, investor, non-resident)
Missed repayments or a poor credit score
An LVR above 80%
By ensuring you meet these criteria, you’ll be in a strong position to negotiate a better deal on your home loan. With these 5 steps, you're on the right track to potentially lowering your interest rate and saving money.
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