Follow these steps to secure a cheaper home loan
Follow these steps to secure a cheaper home loan

Five steps for a cheaper home loan

Fierce competition in the home loan industry is putting borrowers in the box seat to save money on their mortgage.

Record low interest rates have made loans cheaper than ever, but many borrowers can squeeze more savings. Every dollar saved in interest is a dollar off the principal of a home loan and a step closer to paying it off faster. says more than 80 lenders now offer owner-occupier home loan rates below 2.5 per cent, with two and three year fixed-rate mortgages below 2.3 per cent at all of the big four banks.

And investors aren't missing out on the action either, with about 50 lenders cutting investment loan rates since June by an average 0.27 per cent. RateCity says more than 90 lenders offer principal and interest rates below 3 per cent and almost 30 below 2.5 per cent.

Follow these five steps for a better home loan deal.


Too many people have no idea what interest rate they are paying on their own home or investment property loans.

Check your latest correspondence from your lender, search online or give them a call.


Lenders won't tell you how their rate stacks up against competitors. They have no interest in offering you a better deal out of the goodness of their heart.

Fortunately it's easier than ever to find out what's available. Online comparison sites such as,, and give you a broad picture.

Fierce competition among lenders creates opportunity for home loan customers. Picture: istock
Fierce competition among lenders creates opportunity for home loan customers. Picture: istock


No lipstick will be required, but if you're financially attractive to lenders there's a better chance they will lower your mortgage interest rate.

Lending specialists say banks are looking for positive signs like a good credit rating, steady job and a decent amount of equity in your home.

They will even check spending on school fees and Netflix subscriptions, so make sure you're across where all your money goes.


Most people don't like confrontation or haggling. But they don't like wasting money either.

Your research should tell you what your lender charges new customers, so that's a starting point for the conversation. Why should you, a loyal customer for years, but charged more than a newbie?

Ask why your rate is higher than others, threaten to leave and be prepared to follow it through. If this discussion seems too daunting, contact a mortgage broker or adviser who can do the haggling instead.


Switching lenders isn't as daunting as it might sound. Your new loan provider can help with transferring direct debits, and customers today commonly hold accounts with multiple financial institutions.

Before switching, make sure you understand all the extra costs such as new loan application fees, monthly servicing fees and exit penalties that may apply on an existing loan.

Look beyond the interest rate. Switching for just 0.25 per cent extra interest savings may not be worth it if that saving is offset by other loan costs.