Can You Negotiate a Better Home Loan Rate?
Have you ever bought something at the shopping centre – maybe a watch or a jacket – only to see it available for half the price the following week?
It can be a minor annoyance when that happens for smaller purchases. But what if something similar were happening with your mortgage right now? The reality is, the same economic factors that can lead to you spending twice as much on a watch can also affect your mortgage.
That can be good or bad depending on your outlook. If you feel powerless to change your home loan rates, then it’s a bad thing. But if you believe that you CAN do something about the rates you’re paying (and you can), then it’s a good thing.
Not only is achieving a lower rate possible, it may not be as hard as you imagine.
You CAN pay less
You might be paying a higher rate than new customers with the same lender are being offered right now. If you do a little bit of research, you may even discover that there are better home loan deals for you that your own lender offers.
If you suspect (or know) that you’re paying more than others, phone up your lender and ask them to lower the rate on your home loan. As long as you have leverage, you have a great chance of getting a positive outcome from a negotiation.
If you know what other lenders are offering, you can gain power in the conversation by bringing those numbers up. Why can’t they offer what their competitors can? Why should you stay? It’s less expensive and easier for lenders to keep existing customers than to acquire new ones. Even if there’s resistance, remember that their priority is to keep you.
Is it worth it?
If you manage to shave even 0.5% off your home loan rate, you could save tens of thousands of dollars over the life of your loan. If the size of your loan is $500,000 for example, and you reduce your rate by 0.5%, you will save $42,225 over 25 years (and shave $141 off your monthly payments).
* Example given based on the difference in repayment between 4.60% and 4.10% interest.
It’s probably worth a quick phone call to try. You can use our repayment calculator to find out exactly how much you could save with even a small reduction on your home loan rate.
Of course, if negotiating a better home loan deal sounds too difficult or uncomfortable, you could always just switch to a better deal with a better lender.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one. We have some of the best rates around, as well as flexible home loan packages.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to investigate your options and speak to the experts.