HOME > BLOG > Home Loan Advice > How negotiating a better home loan rate could save you a fortune

Despite flatlining wages and record amounts of household debt, Aussie homeowners aren’t putting in a lot of effort to re-negotiate their mortgage rate.

Whilst everyone would love a cheaper home loan, in our increasingly time-poor society putting in the effort to do so seems like a tall order. However, shaving off dollars from your mortgage may actually require little more than a phone call to your current lender.

New research conducted by State Custodians nationwide found that only 13 per cent of 1,006 respondents say they are always on the lookout for better home loan rates.

One third (33 per cent) of Aussies are apathetic about shopping around their home loan deal in one way or another. One in six people (17 per cent) admitted that whilst they’d like to look for a better deal, they either weren’t sure how to go about it, didn’t have the time or simply couldn’t be bothered.

Meanwhile 16 per cent say they wouldn’t even consider shopping for a better rate.

First steps in searching for a better deal when you’re time-poor

  • State Custodians general manager Joanna Pretty says it’s worth customers simply asking their current lenders every now and then whether there’s an option of a cheaper deal.

    "It’s definitely worthwhile to quiz your lender or mortgage broker to make sure you’re constantly getting the right deal for your situation," she says. "Your circumstances may have changed significantly since you originally took out the loan – you may now have more dependents or have a different household income. Plus your future goals may have also shifted. Perhaps you are now looking to an earlier retirement, or conversely are planning to work for longer than originally intended.

    "Whatever your situation, you’re dealing with a lot of money so it’s not in your best interests to just ‘set and forget’ about your loan."

    Ms Pretty adds that many people have an idea that reviewing a current home loan will be a big hassle. However, she says it usually requires little more than a phone call. "You may be pleasantly surprised at the outcome. Even if you get a small discount, that can end up making a big difference overall which is surely worth making a call once in a while."

    It’s also a good idea to check out online comparison sites so you can see how your rate is stacking up against other institutions.

The key is to arm yourself with a variety of information which will help you make the right choice for you and your circumstances, and also be a good point of negotiation.

Joanna Pretty, General Manager, State Custodians

People aged 50 plus least likely to shop around their rate

  • Of the Australians who do make the effort to look around for better home loans, 19 per cent of Gen X look every one to two years, and 12 per cent look every year. Gen Y has 20 per cent looking within one to two years, and 12 per cent investigate yearly.

    Meanwhile, those aged 50 plus were the least likely to look for a better deal, even though with considerations such as retirement and superannuation looming, it would probably be in their best interests to do so. Only 14 per cent of Aussies in this age category would look to change loans every three to five years, and just 11 per cent would think about a new deal at the one to two-year mark.

    Overall men (73 per cent) are more likely than women (59 per cent) to shop their mortgage to see if they can get a better rate or overall deal from a different financial institution. Men are more likely to look around every two years or more often (48 per cent) compared to 31 per cent of women.

    Women (23 per cent) are also more likely than men (13 per cent) to say they’d like to shop for a better deal but don’t have the time or inclination.

    "It’s a fact that many of us are time poor these days, particularly if you’re working and juggling home and family life. However, if you would like a cheaper loan, particularly if you are financially struggling, then it can be really worthwhile making some enquiries," says Ms Pretty. "A little effort may end up going a long way."

  • Use a calculator to get an estimate of how much you can borrow.
    Try one here

  • See if you qualify. To get a more accurate idea of how much you can borrow with State Custodians,
    click here

  • Call our Lending Specialists and they can do the calculation for you over the phone plus answer any questions you have at the time. Talk to us on 13 72 62