Negotiating your interest rate with your current lender
At the time you bought your home or investment property, you probably had the sharpest interest rate possible which made you very happy. But we all know that interest rates fluctuate with time and there’s a good chance your lender’s rate has changed too. Looking at your current interest rate, you may realise it isn’t as competitive as it used to be.
What are your options? You could start shopping around and looking at refinancing your loan; but before you do that, you could try negotiating with your existing lender.
The process is simple:
Open your favourite internet browser and search for ‘Home loan interest rates Australia’. A number of comparison websites will be listed. Note the lenders that look suitable and that offer a lower rate than what you currently have.
Call your current lender’s customer service line and advise them that you are considering refinancing for a better rate. At that point you will likely be put through to the lender’s ‘retention team’. This team specialises in offering interest rates and fee waivers in order to retain your business. Advise the representative of the rates that you have discovered online and ask if they can beat, or at least match, them.
More than likely they will be able to offer you a better rate.
But there are factors that could prohibit your current lender from being able to do this.
For example you may have borrowed more than 80% of the purchase price on your property but the lower rate you have found online is for a loan taken on less than 80% of the purchase price.
Most of the time, however, your current lender will offer you a discounted interest rate or waiving of fees, in order to keep your business.
This small exercise could take you only 15 minutes but might save you thousands of dollars over the term of your loan. It could also save you the need to refinance.
There are situations though when your current lender may no longer be suitable for you, making it necessary to refinance. But at least you know you have done the research.
