How to convince your bank that you deserve a better home loan rate

By Bessie Hassan

Most people with a mortgage simply sign up for a loan, complete the paperwork and make their repayments as stipulated until their debt is paid off. However, your home loan debt will stay with you for 25 to 30 years and it’s one that will consume a large portion of your income. If you want to save money, negotiating a rate discount is key.

Whether it’s a lack of knowledge or confidence, many borrowers never ask for a home loan rate discount. In fact, new research from has found that two-thirds, or 65%, of Australian mortgage holders, are complacent when it comes to asking for a cheaper interest rate.

In other words, the majority of Australians have never asked for a better home loan rate.

Interestingly, although more men (38%) apply for an interest rate cut than women (33%), women are more successful at getting a cheaper rate.

The research also found that a staggering 82% of mortgage holders received a better rate after requesting one, which goes to show that if you don’t ask you won’t receive. A rate discount of even 0.10% or 0.25% could save you several thousands of dollars over the life of your mortgage.

For example, if you had a $375,000 loan with a 5.5% interest rate and you asked your bank for a discount and a new rate of 5.0%, you’d save $41,805 over the course of 30 years. That’s an extra $1,393 each year. You can use an online calculator to estimate your loan repayments.

To convince your bank to give you a lower rate on your loan, follow these steps:

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  1. Review your current rate

You need to know what you’re currently paying to decide whether your interest rate is competitive or not. Check your bank statements to see what your interest rate is and then jump online to benchmark your rate against other products. If you notice that other banks, including specialist, fringe or online lenders, are offering a lower rate, then you should reference this when speaking with your bank.

Taking the example from above, if you’re currently paying 5.5% interest but you notice other banks are offering a similar product with a 5.0% interest rate, make sure to mention this when you go to speak to your bank. In most cases, they’ll want to match or exceed the competition in fear of losing your account.

When comparing interest rates, it’s important to compare similar products. For instance, if you currently have a variable rate mortgage with useful features such as a 100% offset account and the ability to make extra repayments, you should compare rates within a similar product class. As the saying goes, make sure you compare “apples with apples.”

  1. Justify why you deserve better

The next step is to come up with some reasons as to why you deserve a better interest rate. Whether you have an unblemished credit score, a strong repayment history, stable employment or multiple products with the same bank, there are many ways you can prove that you’re a responsible borrower worthy of a better rate. Work out your angle of approach before you speak to your bank.

  1. Research the market

As well as comparing different interest rates to get a feel for the market average, you should also see what kind of features, fees, and promotions are on offer. For instance, if you notice your bank is offering a special introductory rate for new customers, or if they’re waiving the establishment fee, you should keep this information up your sleeve when negotiating for a better deal.

  1. Strike up a conversation with your bank

Once you’ve done your research, it’s time to approach your bank. Explain that you’d like your rate to be reviewed and ask to be put through to their customer service and/or retention department.

When speaking with the representative, mention the kind of rates you’ve seen on offer, tell them you’d like a rate discount and explain why. Clearly justify your case and remember to stay calm. For many banks, it will cost them more to lose you as a customer than it will to grant you a cheaper rate, so stick to your guns as it’s likely they’ll come around eventually. If possible, avoid asking for a specific amount (eg, “I’d like a 0.05% decrease) as you want to see what they come up with first. Chances are they may be willing to offer you a better discount than what you anticipated!

It may not come naturally to some people, but negotiating is an important life skill for both your financial and your personal life. Remember that by researching product rates and building a case for why you deserve a discount, you’ll increase your chances of being approved for a better rate. Yes, it’s a slightly awkward conversation, but it could lead to life-changing benefits.

Author: Bessie Hassan | Money Expert at


By Bessie Hassan