How to Get the Best Rate on Your New Home Loan

Buying a home is expensive, and the last thing you want to do is overpay on your new loan. Interest is never enjoyable to think about, but it’s vital to consider interest rates when deciding which new home loan to go with. The better deal you can find, the lower your interest rate might be, reducing your mortgage payments or allowing you to pay off your loan sooner. 

 

One of the best ways to get the lowest interest rate on your home loan is to enlist the help of a mortgage broker. Here at Simplifi Lending, we’re committed to helping you find the right home loan for you. Keep reading for our top tips on doing just that. 

Negotiating Your Home Loan’s Interest Rate

It’s possible to negotiate your home loan’s interest rate, just as it’s possible to negotiate many things in life. This is one of the easiest ways to get the best rate on your home loan. As the old saying goes, you’ll never get it if you don’t ask. If you choose not to ask for a better interest rate, you most likely won’t get it. This is because most lenders don’t want to hand out better rates, but they might not be opposed to giving it to you if prompted.

 

There’s no guarantee that you’ll get the lower rate even if you ask for it, so don’t assume you’re guaranteed a lower rate. For example, most lenders might not be willing to offer lower interest rates to people with inconsistent credit or repayments to their name. 

Steps To Negotiating Your Home Loan’s Interest Rate

You might be able to get a better rate on your new home loan by following these steps:

• Find Out The Best Possible Rate You Can Get

First of all, you need a plan of how much you’re going to negotiate. Check your bank’s website and the market averages to see what rates are currently being offered so you know what you’re aiming for. Here, you’ll often find one of two things: your bank isn’t competing with the rest of the market, or your bank is offering new customers better rates than yours.

 

Some people have even had luck with calling up their banks pretending to be a new enquirer to see that new borrowers are being offered. You could do this, then use the promise of a better rate to negotiate your current rate down.

1. Determine Whether Your Bank Will Negotiate

There are some defining factors that will make negotiating easier for you. For example, the bigger your loan, the lower the rate will often be. Banks can negotiate to keep their clients, so if you look like you might be leaving to refinance with another lender, you may find that you can negotiate a better deal. 

 

So, what does this mean? Some banks refuse to negotiate if you earn more than 80% of the property value. They might not negotiate if you’re self-employed or a non-resident, or if you’ve missed payments on your debts. 

• Maximising Your Negotiated Price 

New Borrowers

If you’re a new borrower, you should take your time to shop around and make sure you’re choosing the right bank. Each bank suits different people in various ways, so opting for the right one can help you get the most favourable deal. You can even ask major banks to beat their competitors’ prices, or smaller lenders to match the market average. Your mortgage broker can help you create a pricing request to do this.

Existing Borrowers

Banks tend to take advantage of loyalty, so they might be less willing to offer a lower rate if they think you’ll stay with them no matter what. You need to make it known that you are looking to refinance and go through with it if they don’t match the lower rate. You can also send them a discharge letter to let them know you’re serious about refinancing. 

Final Thoughts

Getting the best rate on your home loan can be tricky, but it’s often easier for new borrowers than existing ones. Make sure you shop around to find the market average before committing to one bank. Existing borrowers can try to negotiate if they’re favourable to their lenders, and the best way to do this is often threatening to refinance. 

 

A mortgage broker can help you find the best rate on your home loan, so don’t hesitate to consult a professional if you need advice. Consulting a professional is the easiest way to find the best deal without stressing yourself out.