Do you feel like your lender is charging you more interest than what you should be paying? Maybe you’ve been seeing ads for banks that are offering lower introductory home loan rates and you feel like your lender just isn’t giving you a fair rate. Maybe you’re just curious about what’s out there, or you’ve been considering refinancing to get a better rate on your loan.
If you’re keen to negotiate a better rate with your lender and you’re willing to do the leg work to get the rate you deserve, follow the simple tips we’ve laid out below.
Know Where You Stand
If you take the time to compare other home loans against what you’re currently paying, you might find that your lender just isn’t giving you a fair rate. You might find that introductory rates are much lower than what you’re paying even though you’re a loyal customer that’s been with your lender for years.
Maybe you’re even so loyal that you have multiple accounts with your current lender, such as your bank account, credit card, and other loans as well. And it would be fair to think that this gives you an advantage over new customers who haven’t shown as much loyalty as you.
Unfortunately, that just isn’t the case. Banks actually gauge your likelihood to stick with them and use those stats against you to get you to pay a higher rate.
If you have more than one account through your current lender, they see that as a way to charge you more because it would be too hard, or highly unlikely, for you to leave. And instead they save their lower home loan rates for new customers as a way to attract them to finance their loans through the bank.
Totally unfair, right? You’ve been a loyal customer to them and they’ve made more than enough money off the interest of your loan, yet they pass that savings on to new members.
It’s enough to make you want to leave your lender and refinance with a different bank.
But here’s the thing, now that you’re aware of how the banks operate, you can use it as leverage to negotiate a better home loan rate with your current bank, with far less effort than it would take to compare home loans, find a new lender, and completely refinance.
Rest easy knowing that it’s completely possible to negotiate a lower home loan rate without moving your loan to another lender.
Do Your Research
The first thing you’ll want to do is educate yourself on the competitive rates that other banks are offering by comparing home loans in your area, as well as rates of banks that operate solely online. Often times, online banks offer better interest rates because they have less overhead than brick and mortar businesses. So be sure to research all your options.
A great strategy to use is to play your lender off the rates of other lenders in the marketplace. If you’re with a major bank, you can ask them to beat a competitor’s rate. Whereas if you’re with a smaller bank or lender, you can request that they match a lower rate. Either way, you can entice your lender to lower your interest rate by arming yourself with industry information.
Armed with this information, you’ll be able to have a realistic talk with your lender about what you feel you should be paying. Keep in mind that you’ll need to be assertive and command their attention. Likely, you’ll have to negotiate with them as if you don’t care if they take the offer or not because you know you can leave and get a better rate with another lender.
Be prepared to do so though, instead of just acting as if you will. Some lenders are willing to hear you out with this information, whereas others aren’t, and would much rather see you go than deal with the renegotiation process.
Come to terms with this fact before approaching your lender.
Consider Your Loan Amount
The higher your loan amount, the more willing lenders will be to negotiate a favorable rate with you. This is something to consider if you have lots of equity and would like to increase your loan amount. By doing so, you can request a discount and even receive new customer pricing, which would mean a lower interest rate while staying with your current lender.
Know Who To Talk To
If they offer you a lower rate and it’s still not low enough to compete with an offer you’ve received from a mortgage broker or another bank, ask to speak to someone higher up in the company. Managers and staff that are higher up usually have more leverage and the ability to negotiate a lower rate that the rest of the staff can’t.
Enlist the Help of a Mortgage Broker
Lenders are well aware that a mortgage broker can match you with the best possible rates, no matter where you live. If you approach your lender with a quote you received from a broker, they will definitely hear you out. By doing so, your bank will most likely offer you the lowest possible rate straight away for fear of losing your business.
Be Prepared to Walk Away
If they’re still resistant though, you can always ask for a discharge form. This will drive home the fact that you are more than willing to refinance with another lender that can give you a better rate.
It’s a tough fact to accept, but if your lender isn’t willing to negotiate to give you a rate you feel you deserve, it’s in your best interest to find a lender that values you and gives you a fair rate.
However, keep in mind that there are some banks that are more than willing to negotiate and that see the value in you as a long-term customer. Therefore, they would much rather negotiate with you to continue to
keep your business.
If you’re intrigued by the possibility of re-negotiating your current home loan rate, follow these simple steps and your lender will likely be begging you to stay at a much lower rate than you were paying before.
And if they’re not, then it’s just further reassurance that it’s time to find a new home loan lender that’s actually grateful for your business.