In short: Check the rate your lender gives new customers, gather two or three competing offers, then call your lender's retention team and ask them to match. A strong repayment history, a lower loan-to-value ratio and a genuine willingness to refinance are your best leverage. A mortgage broker can run the comparison and the negotiation for you.

If you’ve been with your current lender for a while, the chances are that you’re paying a loyalty tax in the form of a higher interest rate.

This can be enormously costly, as even a fraction of a percentage point can significantly increase your interest costs over the life of your mortgage. Refinancing is a powerful tool to combat this, potentially helping lower your monthly repayments and providing more freedom to your household budget.

While refinancing can be done by switching to a different lender, you can also get a better rate by negotiating with your current one. However, the idea of negotiating with a bank can be intimidating, and many of us prefer to avoid it. Banks count on this and make a lot of money by charging loyal borrowers higher interest rates.

But negotiating doesn't have to be difficult, and there are several things you can do to maximise your position and get the lowest possible rate for your home loan. In this blog, we'll outline six great tips to prepare you for negotiating a better rate with your lender.

1. Do Your Research

I know it sounds boring, but the first step in negotiating your mortgage rate is to research the current market. Knowledge is power, and the better you prepare, the better your position is to argue your case and achieve a better result.

Begin by knowing your current rate and comparing it with the rates your lender offers to new borrowers. Lenders publish their new-customer rates, and the gap to what existing customers pay can be large. If you’re being charged a higher rate, you’ll be within your rights to ask your lender about this inconsistency.

Furthermore, you should also research the many other home loan products and rates available on the market. By understanding the offers from other lenders, you'll have a point of reference at the negotiation table and the confidence to switch banks if a better rate cannot be reached. You can also use our home loan comparison calculator to help compare how different rates and deals stack up against each other.

Ultimately, the more you know about current market rates, the more leverage you'll have when negotiating with your lender. This knowledge can provide you with a strong foundation to secure a better deal and achieve a more favourable outcome.

2. Highlight Your Financial Strength

To determine your mortgage rate, lenders consider several factors, including your credit score, income, and equity. Demonstrating that you are a model borrower can motivate your lender to offer you a better rate and keep you as a valued client.

If you have a good credit score, a steady income, and a solid amount of equity built up, make sure to emphasise these factors to your lender. If you haven't met these criteria, improving your financial situation in the eyes of the lender can increase your chances of obtaining a better rate.

Lenders perceive financially stable and reliable borrowers as low-risk clients, instilling confidence in their ability to pay back the loan over time. As a result, lenders will often reserve their most competitive rates for these types of borrowers since they are the ideal clients to retain.

When preparing to negotiate with your lender, ensure that you have all the necessary documentation that showcases your financial strength. Providing this information will demonstrate your reliability as a borrower and further increase your chances of securing a better rate.

3. Consider Changing Products or Terms

When it comes to home loans, borrowers typically prioritise the interest rate over all else. However, it’s also important to consider all the other products and features that lenders offer, which may be beneficial to your financial situation.

One such feature is an offset account, which enables borrowers to offset the interest costs of their mortgage through their savings account. If you are a diligent saver and want easy access to your cash, an offset account can be another excellent solution to reduce your interest costs.

Another option is to negotiate other terms of your mortgage, such as fees, the repayment frequency or a package discount. Lenders may be more flexible in other areas, allowing you to obtain a deal that is advantageous in ways other than your interest rate.

Alternatively, if your home loan includes an offset account or other features, you may be able to negotiate a lower rate by removing these features. Lenders typically charge a premium for features like offset accounts, so it's essential to assess whether your current home loan product suits your current financial needs.

4. Be Prepared to Walk Away

One crucial aspect of negotiating a home loan is being prepared to walk away if you feel you're not getting a fair rate. This strategy can give you leverage and might force the lender to offer a more competitive rate.

Banks earn their money over the life of a loan, so losing a client costs them future revenue. Most lenders have a retention team whose job is to keep you. By showing your willingness to walk away, you demonstrate to the lender that you're serious about getting a good deal.

Therefore, if you have done your research and feel that the lender's offer is not fair, don't be afraid to walk away and find a better deal elsewhere. The ability to walk away is a vital part of any negotiation, and it can help you obtain a better deal in the long run.

5. Build Equity and Improve Your Loan-To-Value Ratio

One additional factor that can impact your mortgage rate is your loan-to-value ratio (LVR). Your LVR is calculated by dividing the remaining value of the loan by the total value of the property. Lenders use this metric to assess the level of risk involved in lending you money.

One way to improve your LVR is by making additional repayments towards your mortgage principal. This will help you build equity in your home faster, making you a more attractive borrower to lenders. By doing so, you can increase your chances of getting approved for a lower rate and save money in the long run.

Improving your LVR may take time and effort, but it can be worth it in the end. Not only will it help you qualify for a better mortgage rate, but it can also give you more financial security and flexibility in the future.

6. Consider a Mortgage Broker

If you’re looking to refinance, a mortgage broker can be your most valuable asset when it comes to negotiating your mortgage rate. A qualified mortgage broker will be able to shop around many different lenders for the best rates on your behalf and find you the best deals available on the market.

By having a unique understanding of the home loan industry and the deals currently out there, they will have stronger negotiating power than an individual borrower. A mortgage broker will also be able to help you navigate the complex mortgage application process and offer valuable advice for your situation.

In conclusion, negotiating a favourable mortgage rate with your lender requires patience, persistence, and confidence.

Simple steps, such as researching the market, highlighting your financial strength, and using a mortgage broker, can increase your chances of success.

Additionally, if you are feeling financial stress and worried about your ability to meet your repayments, remember that your lender will have mechanisms in place to help. Banks don't want to see you default on your loan and will work with you to find a solution.

For help comparing your rate, talk to our mortgage brokers or run the numbers in our refinancing calculator.

Frequently asked questions

Can I negotiate my home loan interest rate with my current bank?

Yes. Many lenders will cut an existing customer's rate if asked, especially when you show a competing offer and a good repayment history. Ask for the retention or discharge team.

How much lower a rate should I ask for?

Aim for at least the rate your lender offers new customers for the same loan type and loan-to-value ratio. If they will not get close, refinancing is usually worth costing.

Does refinancing cost money?

There can be discharge, application, valuation and government registration fees, plus break costs on fixed loans. A broker can compare the saving against these costs before you switch.

Last updated: 25 October 2026.

General information only. This article does not take into account your objectives, financial situation or needs, so consider whether it is appropriate for you and seek personal advice before acting. Elephant Financial Pty Ltd trading as Elephant Advisory is an authorised credit representative (ACR 487962) of Yellow Brick Road Aggregation Pty Ltd (formerly Vow Financial Pty Ltd) (ABN 66 138 789 161), Australian Credit Licence 390261.