A 10 minute phone call saved me $120 a month on my home loan
After 12 consecutive rate rises, I called my lender to negotiate my interest rate.
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I'm someone who sees all things financial as complicated and difficult to navigate. The process of buying a home and securing a loan was a huge headache for me, so I figured that refinancing would be equally complex.
This led to me paying the lazy tax, as I witnessed 12 interest rate rises between May 2022 to the latest increase in June 2023.
I watched in real time as all the progress I had made in getting ahead on my loan disappeared as things became more and more unaffordable.
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The cash rate has risen by 4% since May 2022. That's about $1,320 a month extra in repayments for the average mortgage holder.
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I decided enough was enough when I saw rates advertised on the Finder website that were almost 1.5% lower than the 6.9% I was paying.
Even though I wasn't optimistic that I'd get anywhere close to those rates, I contacted my lender ready to play hard.
We organised a call where I was put on with one of their rate specialists. After verifying my identity and listening to some financial disclaimers, I was asked a few straightforward questions:
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"Am I planning to continue living in my property or will I rent it out?"
"Am I planning any commercial enterprises in it?"
"Will I use any equity from my property for a purchase in the next 12 months?"
"Do I want to stick with a variable rate or look at fixing it?"
"What am I looking for in a home loan?" (Lower rates, please)
"What would make me swap home loans to another provider?" (Lower rates, thanks)
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After the briefest of pauses, my rates specialist happily announced they could offer me a 1.15% discount on my loan.
The entire process took maybe 10 minutes and saved me around $120 a month.
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Join Richard by comparing interest rates now and switching to a lower rate.
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Tips from home loans expert Rebecca Pike
Getting a lower interest rate can be as simple as calling up your lender, like Richard did. Other times, you might need to consider refinancing elsewhere. Here are my tips to getting a lower rate:
- Be prepared. Compare rates on the market to see what you could be paying.
- Call your lender. Even if another lender's interest rates look better, always call your existing lender to see if they can offer you a lower rate.
- Calculate full cost. If you're looking at going to another lender, look at your existing lender's exit fees to calculate how much it would cost.
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