12 Aug How to Negotiate a Lower Interest Rate on your Mortgage
With the RBA tightening its monetary policy and raising interest rates, many borrowers are understandably thinking about their own mortgage rates and what to do about higher repayments.
Understanding your repayments and how they compare is important and it’s vital that you are regularly reviewing your home loan products with a mortgage broker in Melbourne.
Fortunately, there are some steps you can take to see if your broker might be able to compare deals and find a product that might be a better fit.
Understand your situation
The first thing to consider before looking for products with lower interest rates is the type of financial situation you’re in.
Lenders will typically offer higher interest rates on loans to borrowers they perceive as being higher risk. If you’re borrowing at a higher Loan to Value Ratio (LVR) or if you don’t have a long-term track record of steady earnings, lenders might potentially assess you as being higher risk.
When you’re comparing loans and seeing that lower interest rates are available, it’s important that you take into account your own personal situation. While some banks might be offering low introductory rates, your financial circumstances might mean you don’t qualify for rates that low.
Talk to your lender
One of the easiest things you can do to try and negotiate a lower interest rate is to simply talk to your lender.
Many lenders would prefer to simply match a comparable interest rate rather than lose you as a customer. Again, it’s important that you’re comparing the same types of loans and factoring in what might be available to you based on your own personal circumstances and financial situation.
The worst they can say is no, so it’s always worth asking. You should be working with your mortgage broker on a regular basis and reviewing your loans to make sure you’re getting what you believe is a fair deal.
Look at refinance options
If your current lender is not going to come to the party, then it might be time to speak to your mortgage broker and compare the current offers in the market.
There are often special incentives on offer when you move over to a new lender and that could include things like cashbacks or introductory rates for a certain period of time.
While it is important to try and secure the best interest rate that you can, it isn’t always the key consideration when taking out a loan or refinancing. It’s far more important that you’re able to get finance in the first place.
Your mortgage broker will be able to help you on your journey and guide you through the process.
It’s critical to regularly review your home loan and examine your options – especially as interest rates increase.
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