How to ask for a rate cut on your home loan

Some of the most common advice you’ll read at Mozo is to, “Call your mortgage lender.” See if you can negotiate a lower interest rate and avoid mortgage stress. 

But how do you actually do this? What do you ask for? And what happens if they say no? 

Let’s finally spill the tea. Here’s how to ask for a rate cut on your home loan. 

There is no point in negotiating if you don’t have all the facts. 

Compare home loan interest rates to know what counts as high, low, and mid in the market. Look at the rates offered by your lender, too. If you’ve been with them a while, there’s a strong chance they offer better rates to new borrowers.

Don’t be fooled by headline rates, however: the comparison rate is the most accurate reflection of how much interest you actually pay.

Look at your home loan history to see if you’re the kind of borrower worth keeping. Odds are, you are!

A “good” borrower in the eyes of a lender is the kind of borrower who makes timely mortgage payments on a valuable (i.e. big) loan. That’s it. Everything else, like building home equity or making extra repayments, is just icing on the cake. 

Speaking of home equity, however, it might be worth checking your loan-to-value ratio (LVR) as well. If your property value has risen or you’ve paid off a considerable amount of your principal, then the odds are your LVR is lower. And lower LVRs tend to have lower interest rates.

Once you know your borrowing history and the better offers on the market, it’s time to call your lender. And we mean actually call them. Get their number, dial it, and call it. Negotiate with a person.

But since phone anxiety is a real thing, let’s map out the general conversation. Here’s an example of how to ask for a rate cut. 

1. Get the right person on the line. Ask to speak to a lending specialist or someone on their home loan team, because you’d like to negotiate your interest rate. 
2. Explain your situation. Essentially, you want them to match another rate deal on the market. Cite your good history as a borrower – especially if you have a big loan with a low LVR – if you need evidence for why they should keep you. Bonus points if you get them to match deals they offer new borrowers.
3. If they say no, be prepared to walk. Most lenders would rather lose a little money than lose your business. However, if your lender isn’t playing ball, it could be time to walk. And walking means refinancing. 

Remember, stay calm and polite. You’re dealing with a human.

If your mortgage lender won’t negotiate, it’s probably time to refinance. 

Not only is negotiating (or any attempt to keep you) good business, but it’s a sign of respect. A mortgage lender that doesn’t respect you doesn’t value you – and you deserve better.

So, if you did your research, negotiated well, and your home loan lender still said no, treat it as a giant red flag. Mozo tracks scores of home loan lenders. Odds are, one of them has greener pastures.

Heck, if you refinance, you could get that rate cut after all!

If you’re experiencing financial hardship, it’s important to ask for help. Your lender or a financial planner can help you devise strategies to make your home loan more affordable. 

Compare refinance home loans in the table below.