5 tips for getting a cheaper rate from your lender

5 tips for getting a cheaper rate from your lender

Yes, interest rates are at an all-time low in Australia, but what does this mean for borrowers? Well, it means you could be saving a whole lot more on your loan, if you’re savvy about renegotiating.


Refinancing to a more attractive loan, with a cheaper rate and terms that match your goals, can help you shave thousands off your loan. But only if it’s done smart. So, how do you renegotiate a home loan and save more? 


We’ve blogged our top tips.

1. Find out what your rate is

According to a 2018 study by UBank, 82% of borrowers in Australia don’t actually know what their home loan rate is. If you’re in this majority, don’t worry, because now is the time to find out and take steps to see if you could be paying less.


Your first step is easy. Take a look at your statement or contact your lender direct to find out what interest you’re paying on your loan. If you’re paying over 4%, you definitely need to consider renegotiating to a cheaper rate.

2. Look good to lenders

There are a few factors that will make you look more attractive to lenders. However, if you don’t tick these boxes, don’t stress – it may still be possible to secure a more affordable home loan that matches your goals. (See point 5 for more!)


With this caveat in mind, here is what lenders tend to like in borrowers with an existing property:*

  • Owning at least 20% of the property.
  • Having a full-time job.
  • Paying off principal and interest.
  • Living in the property.


* Source: The New Daily – Your Budget blog by Mike Bruce

3. Consider fees

Most ‘tips for refinancing’ blogs make rates the focus, but there are some issues with focusing solely on securing the cheapest possible interest rate. Namely, hidden fees and charges can make a seemingly low interest loan more expensive in the long term.


This is why we recommend reviewing the ongoing fees attached to a home loan, as well as the interest rate. On top of this, if you are refinancing out of a fixed-rate mortgage, early repayment penalties may apply. 


There may also be discharge fees associated with leaving your original home loan. These fees are paid to the lender to cover the cost of discharging the home loan, and can be anywhere between $140 and $500.

4. Think about rates

There has been a lot of press about some lenders offering 2% rates to lenders in Australia. As of 31 July 2019, these 2% loans were only offered by lenders who were not authorised deposit taking institutions (ADIs).


We wrote about the impact of choosing a lender that does not offer a genuine offset account recently. Basically, instead of being quarantined from your funds, your offset account is completely separate to it.


As a result, the Government guarantee that applies to deposits over $250,000, is not applicable. Read more about this here.

5. Get a good mortgage broker on your team

If comparing interest rates, hidden fees and ensuring you look as attractive as possible to prospective lenders seems like a lot to take on, a good mortgage broker could be your (not so) secret weapon.


A mortgage broker does the legwork for you, by reviewing and comparing different home loan products, then recommending a solution that matches your goals and budget. Plus, they have access to more home loan products than the banks.


If your mortgage broker can find a home loan that is more attractive than your existing one, they will renegotiate the loan on your behalf and take care of the refinancing paperwork.

Need support with renegotiating your home loan?

 Talk to us about refinancing to a more attractive home loan. We’ll do our best to ensure your new home loan saves you more, while also matching your budget and goals. If a more attractive loan is not available, you’ll have peace of mind that your current loan is still a good fit for you. So, it’s a win-win.


Get started now.


Financial Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.