Mozo guides

How to ask for a rate cut on your home loan

Woman excited to negotiate her home loan interest rate with her mortgage lender

Some of the most common advice you’ll read at Mozo is to, “Call your mortgage lender.” See if you can negotiate a lower interest rate and avoid mortgage stress

But how do you actually do this? What do you ask for? And what happens if they say no? 

Let’s finally spill the tea. Here’s how to ask for a rate cut on your home loan

Find low home loan rates

There is no point in negotiating if you don’t have all the facts. 

Compare home loan interest rates to know what counts as high, low, and mid in the market. Look at the rates offered by your lender, too. If you’ve been with them a while, there’s a strong chance they offer better rates to new borrowers.

Don’t be fooled by headline rates, however: the comparison rate is the most accurate reflection of how much interest you actually pay.

Look at your home loan progress

Look at your home loan history to see if you’re the kind of borrower worth keeping. Odds are, you are!

A “good” borrower in the eyes of a lender is the kind of borrower who makes timely mortgage payments on a valuable (i.e. big) loan. That’s it. Everything else, like building home equity or making extra repayments, is just icing on the cake. 

Speaking of home equity, however, it might be worth checking your loan-to-value ratio (LVR) as well. If your property value has risen or you’ve paid off a considerable amount of your principal, then the odds are your LVR is lower. And lower LVRs tend to have lower interest rates.

For real, call your lender

Once you know your borrowing history and the better offers on the market, it’s time to call your lender. And we mean actually call them. Get their number, dial it, and call it. Negotiate with a person.

But since phone anxiety is a real thing, let’s map out the general conversation. Here’s an example of how to ask for a rate cut. 

  1. Get the right person on the line. Ask to speak to a lending specialist or someone on their home loan team, because you’d like to negotiate your interest rate. 
  2. Explain your situation. Essentially, you want them to match another rate deal on the market. Cite your good history as a borrower – especially if you have a big loan with a low LVR – if you need evidence for why they should keep you. Bonus points if you get them to match deals they offer new borrowers.
  3. If they say no, be prepared to walk. Most lenders would rather lose a little money than lose your business. However, if your lender isn’t playing ball, it could be time to walk. And walking means refinancing. 

Remember, stay calm and polite. You’re dealing with a human.

Home loan hot tip!

Your mortgage broker can help you negotiate your home loan interest rate. Ask them to talk to your lender on your behalf.

My lender won’t negotiate my rate. Now what?

If your mortgage lender won’t negotiate, it’s probably time to refinance

Not only is negotiating (or any attempt to keep you) good business, but it’s a sign of respect. A mortgage lender that doesn’t respect you doesn’t value you – and you deserve better.

So, if you did your research, negotiated well, and your home loan lender still said no, treat it as a giant red flag. Mozo tracks scores of home loan lenders. Odds are, one of them has greener pastures.

Heck, if you refinance, you could get that rate cut after all!

If you’re experiencing financial hardship, it’s important to ask for help. Your lender or a financial planner can help you devise strategies to make your home loan more affordable. 

Compare refinance home loans in the table below.

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 473 home loans.
Last updated 15 June 2024 Important disclosures and comparison rate warning*
  • Variable Home Loan 90

    Principal and Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.04% p.a. variable
    6.06% p.a.

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

    Compare
    Details
  • Basic Home Loan

    Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

    Compare
    Details
  • The Better Home Loan Special Offer

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.14% p.a.

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

    Compare
    Details
image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Evlin DuBose
Evlin DuBose
RG146
Senior Money Writer

Evlin is RG146 certified for Generic Knowledge and has become a leading voice in finance news since joining Mozo two years ago. She is regularly featured in Google's Top Stories alongside major publications like News.com.au and Yahoo Finance, and seasoned journalists. Despite being in the industry for just two years, she is Mozo's go-to writer for all things RBA and her research has been referenced by the Victorian Government. With a Bachelor of Communications degree from UTS, where she won the Dean's Merit Award and acted as the Director of Student Publications.