Last Updated: 22nd May, 2024

Step 1: What is the lowest possible interest rate?

It’s impossible to negotiate without knowing just how much lower your bank can go!

There are three simple ways to find out:

  • Use our interest rates page to find out what off-market discounts are being offered.
  • Check your bank’s website to see what rates they are offering new borrowers.
  • Call the bank, pretend you have a new enquiry for a large loan and ask them for their best pricing.

What you’ll find is one of two things:

  • Your bank isn’t offering you the interest rate that they’re giving to new borrowers (more on this later), or
  • Your bank just isn’t competing with the rest of the market! No bank is competitive for all loan types and sizes.
  • Step 2: Find out if anything will stop your bank from negotiating

    So what allows you to get a lower interest rate?

    • The bigger the loan, the lower the rate!
    • Borrowing under 80% of the property value will get you a better rate with some lenders.
    • Banks offer better deals on home loans than investment loans.
    • Banks will offer a better rate to win a new customer which is why people refinance.

    When will you pay a higher interest rate?

    • Investment loans and interest only loans tend to have higher rates but some banks will still negotiate
    • Some banks refuse to negotiate if you owe over 80% of the property value.
    • Most banks will not negotiate the rate for low doc loans so it’s often better to refinance.
    • The bank may not have an appetite for your customer type, for example, if you’re a non-resident, self-employed or you’re a property investor.
    • If you’ve missed payments on your debts, they’ll refuse to negotiate so it’s better to refinance.
    • Banks don’t offer their existing borrowers the best rates. They actually punish loyalty!

    Do you need help to get a better interest rate? There are ways you can lower your repayment without refinancing. Give us a call on 1300 889 743 or fill in our free assessment form and our mortgage brokers will do the negotiating for you!

    Step 3: Maximising your discount

    You might have seen a few things that are going to stop you from getting a better discount. That’s ok, there are some ways around this!

    • Borrowing over 80% of the property value? You can still get discounted rates and waived Lenders Mortgage Insurance (LMI) with a guarantor loan.
    • Can’t get a guarantor? Some banks don’t charge you a higher rate for borrowing over 80% either way.
    • Some banks approve investment loans at home loan rates if they’re combined with a home loan.
    • Switch your investment loan to be a home loan if you have moved into that property.
    • Do you have lots of equity? If you’re good with your money, you can borrow more than you need to get the biggest discount then repay the additional funds after settlement.
    • Consider a fixed rate loan if the bank is currently offering low rates (your mortgage broker can help with this!).
    • Have an existing loan? Increase your loan while asking for a discount and you’ll get access to new customer pricing which is more competitive.

    Once you’ve done all of this, it’s time for the fun part: negotiation.

    GET ENROLLED FOR THE Home Buyers Program

    Thinking of buying a home?

    Learn how to buy a house and avoid costly mistakes in under 2 hours.


    Step 4: How to haggle with your bank

    New borrowers

    Firstly, you have to apply with the right bank. Each bank has their own strengths and weaknesses and they each suit different people.

    If you and your bank are a mismatch then you’ll never get the interest rate you want. It’s better to choose the right one.

    The best strategy is to play your bank off against their main competitors.

    If you’re with a major bank, ask them to beat what the other major banks are offering.

    If you’re with a smaller lender, ask them to match what’s on offer on the market.

    Your mortgage broker can do this for you using a pricing request.

    Banks know that a mortgage broker can take you to any lender so they have to offer you their best rate right away or they risk losing your business.

    Existing borrowers

    Let’s hope you aren’t too loyal. The banks will know if you are and it can prevent you from getting their best offer.

    The bank’s goal is to offer you the lowest possible discount that will make you stay.

    They believe that most people are too lazy to refinance and, if they offer a small discount, that will be enough for most customers.

    You need to make it clear that you will refinance! You can call them with an offer from a competitor or you can get us to put in a pricing request for you.

    When they reply, you need to reject their offer and ask to speak to someone higher up.

    You should also ask your bank to send you a discharge form so they know you’re serious. Better yet, you can actually download one from our website.

    If they still refuse to give you a strong offer then refinance! Why stay with a bank that isn’t going to give you a good deal?

    Step 5: Break up with your bank, refinance to a better deal

    Check out the interest rate specials that are available from some of our lenders.

    Some of these discounts are off-market, in other words, they are ones we have already negotiated for certain loan size and they’re not available to the general public.

    You can call us on 1300 889 743 or fill in our free assessment form to find out how our mortgage brokers can help you to get a better deal.

    Loyalty isn't what it used to be…

    Our parents probably stayed with their bank for life. It was almost unheard of to refinance to another lender.

    In fact, many banks didn’t accept refinances as they didn’t know the history of the customer they were taking on.

    Modern day banks talk about MFI and sticky customers.

    Someone who uses a bank as their Main Financial Institution (MFI) tend to have their cheque account, credit card and home loan all with the one bank. Their salary goes into the cheque account and they are very unlikely to leave the bank.

    The bank’s goal is to give you as many products with them so you are less likely to leave.

    If you’ve got over 3 products with the bank then you’re a sticky customer. The bank knows you are very unlikely to refinance.

    If you’ve got over 5 products, such as a home loan, investment loan, cheque account, credit card and insurance, then you’re not going anywhere!

    Why does this matter?

    A bank doesn’t need to give a loyal customer a great discount!

    They need to give discounts to attract new customers and to keep the customers that are likely to leave.

    The major banks (CBA, NAB, Westpac & ANZ) have special algorithms that can predict how likely you are to leave.

    So what should you do? Be the customer that actually does refinance!

    You might want to look at the lender reviews section and choose a lender that is ‘customer-owned’ so it’s less likely that you’ll have this problem again.

    How we can help today and in the years to come

    If you use us as your mortgage broker, we can match you with the right bank for you and lodge a pricing request to make sure they sharpen their pencil and give you a better deal.

    However, what you really need is someone to monitor your mortgage and challenge the bank every time they mess with your rate.

    We have a team that spends all day repricing the loans for our existing borrowers and it’s totally free of charge! Their goal is to get your bank to match the current offers from the market and when they don’t, recommend that you refinance.

    What that means is that you don’t have to worry about your rate for the 30-year life of your loan!

    Call us on 1300 889 743 or fill in our free assessment form and we’ll let you know what interest rates you quality for.

    How they mess with your interest rate

    There’s no end of ways that lenders can increase your interest rate without you realising it. Here are just a few of the more common ways they do it:

    • Hiking your rate when your fixed rate expires.
    • Not passing on a RBA rate cut.
    • Increasing rates by more than the RBA.
    • Blaming new legislation or capital requirements to increase your rate.
    • Discontinuing your loan product then offering a new product with good rates to new borrowers.
    • Cancelling your professional package discount without telling you for any number of reasons hidden in the fine print of their terms and conditions booklet.

    Like we said, the banks have decades of experience and have gotten very good at ignoring loyal customers. In fact, they’ve almost conditioned us to believe it’s normal to have your rate hiked from time to time.

    Is there anything that can’t be negotiated?

    Every lender has their line in the sand where they just can’t go any lower on your mortgage interest rate. But what else can or can’t be negotiated?

    • Some lenders can negotiate waived LMI up to 85% of the property value.
    • Waived annual fees are available with some lenders.
    • Other waived fees are typically only approved if the bank has delayed your settlement.
    • They can backdate an interest rate change, particularly where they did something dodgy like cancelling your professional package discount.
    • They can’t approve a discount that their core banking system doesn’t allow them to do.
    • The major banks including NAB, Westpac, CBA & ANZ don’t want to start a price war so they won’t go too far from each other in terms of negotiating your interest rate.
    • Some lenders like ING Direct do not negotiate on the interest rates for their home loans.

    Let us help you get an unbeatable rate

    Our mortgage brokers will negotiate a great interest rate on your behalf and ensure that you continue to get sharp interest rates throughout the life of your mortgage.

    Call us on 1300 889 743 or fill in our free assessment form and we’ll let you know what interest rates you can qualify for.