How to negotiate a better home loan deal

November 01, 2016
Melinda Halloran

With mortgage repayments being one of the largest household expenses for most Australians, it makes sense that you would want to save money on them where you can. One way to do this is to regularly review your loan to ensure you are getting the best rate.

With interest rates continually fluctuating and lenders introducing competitive new loans, you may find that you could be accessing a lower interest rate. Saving just 0.1% on the interest rate of a 30-year, $300,000 loan could equal up to $6,246 in savings.  

So what are the secrets to negotiating a better home loan deal? Here are some ideas.

1. Do your research 

Before you start speaking to lenders, it’s important to do your homework. Read through the terms of your loan to check if there are any exit fees on your mortgage and what these will cost you. Then research the market to see what rates are available. The more information you have, the more authority you will be able to exert when speaking to lenders. 

Related: Should you refinance your mortgage?

2. Speak to your lender

If you are happy with your lender, the best place to start is by asking them what they can offer you. But don’t limit yourself to this discussion. After speaking to your lender, compare their fees and rates with those of other lenders to ensure you are getting the best deal.

If your lender isn’t the most affordable and you would like to stay with them, show them the cheaper loans you have found and ask if they can either match these or beat them. Lenders don’t like to loose business and will reward loyal borrowers who make their repayments on time. If you have been a good, reliable customer, make sure you highlight this in your negotiations.

3. Speak to other lenders

When you are speaking to multiple lenders, make it clear you are looking around for the best deal. Disclose some of the better offers you’ve had from other lenders and ask if you can negotiate further on interest rates or fees. If you have more than 20% equity in your home loan and a strong credit history, lenders will be eager to compete for your business.

Related: Five questions to ask when applying for a home loan 

4. Compare fees as well as interest rates

When you are comparing loans from lenders, you need to look at more than just the advertised interest rate. The fees associated with a loan and loan features do add up, affecting the amount you will pay over the life of a loan. When negotiating with lenders, it is beneficial negotiate the fees of your loan to ensure you are getting a good deal. Be particularly cautious when it comes to introductory interest rate offers, as these loans are often more expensive after the introductory period ends.

Related: Should you fix your home loan when rates are low? 

5. Keep your emotions in check

Negotiating the loan for a home can be emotional for some people, and for others haggling just feels uncomfortable. To ensure you get the best outcome, it’s important to keep a level head and have the confidence to simply ask lenders if they can do better than what’s advertised.

If you find the process too complex or overwhelming, you shouldn’t let that stop you from reviewing your home loan options. I can compare loans and speak to lenders on your behalf, and then handle the loan transfer process for you. Given the amount of money you could save by switching, it’s well worth your time to compare your options.

 – Luke Cashin

0419 733 862 | 
Your Garden City Mortgage Broker, Brisbane 

Posted in: Refinancing

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