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How To Ask Your Lender For A Better Deal

With interest rates predicted to rise further, refinancing may help you save money on your mortgage repayments. But if you aren’t sure how to ask your lender for a better deal on your home loan, these tips may help.

EA asked Natalie Wilcox, director/finance manager with Melbourne-based mortgage broking specialists Think Advantage, to share some tips on how homeowners can have the confidence to ask their existing lender for a better deal – and how the conversation could help ease your mortgage debt.

“As a broker with a variety of lenders we have access to tools that enable us to request a better variable rate for our existing clients,” she says. “We use this a lot lately.  As a business, we go through our book every six months and, depending on the individual client’s product and lender, we review their variable rate to ensure they are comparable to other lenders in the market.”

And for people who want to try to get a better deal for themselves, Ms Wilcox says picking up the phone to speak to your lender can deliver positive results – especially if you hint at leaving their financial institution and taking your home loan business somewhere else.

“We give them the bank’s retention team number to call and get them to say the following: 

‘I’ve been offered XYZ at lender ABC – what can you do for me?’  

It doesn’t always work, due to the client’s conduct on their loan or their loan to value ratio (LVR), but it is also worth a try,” she says.

Ms Wilcox says the issues facing a lot of people who purchased at the peak of the market when rates were so low and property prices were high is that – unless they have been paying extra off on their mortgage – they will not have a great deal of equity in their property.

“These are the clients who are going to be on the higher variable interest rates and won’t be able to refinance out of their lender, so these are the ones who will struggle. We have many clients who have also had a lot of changes in circumstances since their purchase, which will lead to more ‘mortgage prison’ clients,” she says.

But, she says, there are still options.

“My strongest suggestion for those that can’t renegotiate a better variable rate with their current lender is to talk to a well-established, knowledgeable mortgage broker. We write more than 65 per cent of home loans these days. We will be able to tell that person if they can obtain a better variable interest rate elsewhere or not, rather than them going from lender to lender and having their credit report impacted via multiple inquiries,” Ms Wilcox says.

“If a client is at a 80 per cent LVR and can move lenders, some are offering cashbacks to cover the costs of moving lenders with a better rate.  Note CBA, BankWest and NAB all withdrew their cashback offers last week, but we still have Bank of Melbourne, ANZ, ING, ME Bank, AMP, Bank of Queensland, Heritage and Suncorp still doing these – although I don’t know for how much longer.”

Conditions do apply, she warns.

The bottom line:

Sophie Matthews, a home loan specialist with Compare Club, agrees that asking your lender for a better deal on your mortgage is as simple as picking up the phone to talk to them.

“Explain you’re looking to go elsewhere, as you have found your rate is not the most competitive,” she says. “Ask your bank: what is the best rate you can offer me at this point as I will look to move elsewhere if you’re not able to match or beat what the other provider is offering me?”

According to Ms Matthews, with many borrowers refinancing every year or two, there is really no limit on how many times you can ask for a better deal.

“There’s no harm in asking and you may find you can save money in the long term,” she says.

Go deeper: A home loan offset account vs redraw facility: which is better?

Financial disclaimer

The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.