How to negotiate a better home loan interest rate

How do you negotiate the best home loan interest rate on your mortgage, be it investment loan or principal residence? Our Mum CFOs share their hints and tips.

  • Research….know what’s out there. Get a few different banks/credit unions etc involved or use a really great broker. I found the more income you have as proof gives you a much better rate too. Plus having a bigger deposit for the property.
  • Use a mortgage broker who does a lot of business. They have more power to negotiate with the banks. Shop around.
  • Find out who has the most ability to negotiate. In the bank I worked at it was mobile bankers and brokers. It depends on the size of the loan. The bigger the loan, the bigger the discount available. Different roles have different discount rate approvals. For example, the regional manager has higher than the mobile banker, the state manager has higher than the regional manager. You want someone motivated and hungry to close your deal. (proper discounts kicked in for loans higher than 500k and you could really push > 1million – at that amount you’d be going with a private banker instead)
  • I’m a mortgage broker and I negotiate my own interest rates, which are lower than the current advertised rates. It does come down to competition, your situation and the broker who will go in and bat for you.
  • We didn’t use a broker – we went to the first bank and asked for the best variable rate they could do and then asked each bank after that to beat it. If your mortgage is over $1 mill you get a discounted rate as well.
  • The more you borrow the lower the interest rate. We borrowed as much as we could to buy a house and then sold our unit. So we got a low rate for borrowing but now have a lot of it paid off. Our mortgage broker kept playing the banks off against one another to compete for our loan by giving us the lowest rate.
  • Ask friends or family which banks they’re with and who their mortgage broker is; it might be worth the switch.
  • Every other month, I just call my bank and see if I can have a reduced rate. There’s no harm in asking, and you’d be surprised what discretion they have.
  • I sometimes call quoting other banks’ interest rate packages and demand a similar package – I usually get a comparatively low rate.

Disclaimer: readers please check your own facts as Mum CFOs are not accountable for the above-mentioned advice from community members.

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