How to negotiate a lower interest rate on your mortgage

Whether you have an existing loan or you're thinking of refinancing, you can try to negotiate a lower rate with your current lender. Use our handy phone script so you can know exactly what to say to negotiate a lower rate.

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By

Richard Whitten

Edited by

Jason Loewenthal

Updated

Fact checked

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Key takeaways

  • It is possible to negotiate a lower interest with your home loan lender if you think your rate is too high.
  • There are a couple of different ways you can ask your lender for a lower rate (and we have example scripts below!)
  • There's no guarantee that the lender will reduce your rate and if they don't you might want to consider refinancing.

According to Finder research, a record 47% of borrowers were struggling to pay their home loan in October 2024. As interest rates rose over 2022 and 2023 it left many people with expensive mortgage repayments. Even if many could dip into savings to help with the cost, it's not necessarily a long term solution.

But many borrowers don't realise they might be able to negotiate a lower interest rate just by calling their lender and asking to speak to the retention team.

Depending on your circumstances this may also not be a long-term solution, but hopefully it can help.

You can ask your lender to give you its lowest rate for your loan type. Or you can ask them to match a better offer you've seen elsewhere. If they say no, then it's time to refinance.

Here are 2 phone scripts you can use when negotiating with your lender's retention team in both scenarios. You can also download them as PDFs and print them off.

Refinance script 1: You can see your lender is advertising a lower rate for new customers

Download this script as a PDF

You might find your lender has a lower interest rate for new customers. But they've left you on the old, lower rate. Call your lender. Initially, your bank will ask you to confirm your identity and share your account details, so have your account number ready before you call. It's also a good idea to know roughly how long you've had your loan, if you can recall, to demonstrate the value of your business over time.

You: I've had my mortgage with you for X years. I have a variable rate Basic Saver home loan. It's an owner-occupier loan with principal-and-interest repayments.

I looked at my last loan statement and it says my interest rate is currently 6.50%.

Customer support: That's correct.

You: But I just looked at your website and I can see the same loan as mine, the variable rate Basic Saver home loan. And you're advertising an interest rate of 5.95%. That's 55 basis points lower than my rate.

Customer support: Yes, I see. We're currently running a special promotion for new borrowers. That's the 5.95% rate you're seeing.

You: I understand. I want you to put me on the 5.95% rate. I've got the same loan and I don't see why I should be on a higher rate for no reason.

Customer support: I totally understand. I can't approve that right away. I can however offer you an adjusted rate of 6.25%, which is 25 basis points lower than your current rate.

You: I'm sorry but I really will need the 5.95%. If you can't give me that rate, I have seen a similar rate offered by other lenders. So I will need to refinance my mortgage. Are you able to send me a mortgage discharge form so I can start that process?

Note: this part is really important! If you request a discharge form, they know you're serious about moving your loan and they won't want to lose your business. Don't worry if they call your bluff and send you the form, and you don't actually want to move lenders – you don't have to do anything if you don't want to.

Customer support: Just give me one second, I can put you through to our post-settlement team. They might be able to help you with your request. Can I transfer you?

You: Of course. Thank you.

[HOLD MUSIC]

Post-settlement support: Hello. Thank you for holding. We're pleased to inform you that we've adjusted your interest rate to 5.95%. You'll receive an email shortly confirming your new rate, which will take effect from next week.

You: Thank you so much.

Note: They may not be able to approve a rate reduction on the phone, and instead, might say they will escalate the matter and get back to you within a few business days.

However, if they're not willing to offer you the same rate as new customers, take this as a sign to shop around for a cheaper deal. The mortgage market is very competitive so there's no need to pay more than you need to.

Refinance script 2: You've seen a better rate from a different lender

Download this script as a PDF

In this scenario we can assume you've got the best deal from your current lender. But you've found a more competitive interest rate with another lender (make sure the rate is for the same type of home loan).

Have your account details ready before calling. And get together a list of lower home loan rates to mention when calling.

You: I have a variable rate Basic Saver home loan. It's an owner-occupier loan with principal-and-interest repayments.

I looked at my last loan statement and it says my interest rate is currently 6.50%.

Customer support: That's correct.

You: I've had my mortgage with you for X years. I've looked around and seen that other banks are offering cheaper interest rates than I'm paying, so I want to know if you can offer me a better deal on my current loan?

Customer support: Do you have a specific home loan offer you've seen that you would like us to match?

You: Yes, I've seen Bank A is offering the same loan type as mine for 5.95%. Are you able to match this?

Customer support: I totally understand. I can't approve that right away. I can however offer you an adjusted rate of 6.25%, which is 25 basis points lower than your current rate.

You: I'm sorry but I really will need the 5.95%. If you can't give me that rate, as I said, I have seen a similar rate offered by other lenders. So I will need to refinance my mortgage. Are you able to send me a mortgage discharge form so I can start that process?

Note: this part is really important! If you request a discharge form, they know you're serious about moving your loan and they won't want to lose your business. Don't worry if they call your bluff and send you the form, and you don't actually want to move lenders – you don't have to do anything if you don't want to.

Customer support: Just give me one second, I can put you through to our post-settlement team. They might be able to help you with your request. Can I transfer you?

You: Of course. Thank you.

[HOLD MUSIC]

Post-settlement support: Hello. Thank you for holding. We're pleased to inform you that we've adjusted your interest rate to 5.95%. You'll receive an email shortly confirming your new rate, which will take effect from next week.

You: Thank you so much.

Note: They may not be able to approve a rate reduction on the phone, and instead, might say they will escalate the matter and get back to you within a few business days.

However, if they're not willing to offer you the lower rate that you're looking for, take this as a sign to shop around for a cheaper deal. The mortgage market is very competitive so there's no need to pay more than you need to.

How much can you save by negotiating a better rate?

Even a small interest rate discount can save you hundreds, even thousands of dollars a year. Here's a simple example:

  • You borrowed $500,000 over 30 years with a rate of 6.00%.
  • Your monthly repayments = $2,998.
  • You notice your lender is offering a better rate of 5.80%, so you call them and get the new rate.
  • Your monthly repayments fall to $2,934 a month. You save $64 a month or $768 a year.

That's just a hypothetical example, but goes to show that even a small discount really helps you save on repayments.

4 tips to help you refinance your home loan

If negotiating a lower rate with your lender doesn't work, then you need to refinance. This means looking for a new, better home loan and then switching.

Here are some tips:

  1. Prove your worth. If you've got proof of a long history of making your loan repayments on time, or even making additional repayments, you'll have more power at the negotiating table.
  2. Demonstrate your loyalty. If you've been a loyal customer with your bank for several years, don't be afraid to play on this connection. Why should a new customer be given a better deal than you, someone who has a long relationship with the institution?
  3. Compare like for like. Before telling your lender you've found a better deal, make sure it's for a comparable home loan. If you have an investment loan, you will not be able to convince your lender to give you its lowest variable rate owner-occupier loan. You need to compare your loan to another investment loan.
  4. Be prepared to switch. Banks would prefer to keep your business rather than entice a new customer, so don't leave your lender in any doubt about your willingness to switch to a new lender if needed. It's important that you are prepared to act if your lender won't come to the party and offer you a better deal.

Need more help? Check out our in-depth home loan refinancing guide.

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To make sure you get accurate and helpful information, this guide has been edited by Jason Loewenthal as part of our fact-checking process.
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Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise
Richard has written 562 Finder guides across topics including:
  • Home loans
  • Property
  • Personal finance
  • Money-saving tips
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