How to negotiate a mortgage rate
Haggling over your mortgage is the hour of the year you can have the highest "hourly wage". An interest rate cut of just 0.5% for a loan of 3 million gives 15,000 saved a year.
1. Check your current loan-to-value ratio
The bank gives the best interest rates to the customers with the lowest risk. If your home has increased in value since you bought it, or you have paid off a lot of the loan, your loan-to-value ratio has gone down.
- Get an updated e-appraisal from a real estate agent.
- Is your loan under 60% of the home's value? Then you have a very strong negotiating card.
2. What are the competitors offering?
You must know what a "good" interest rate is in today's market before you call the bank.
- Check the list prices on financial portals or with challenger banks.
- Get a real, concrete offer from another bank. Your bank will always match the offer if they know you are actually on your way out the door.
3. How to have the talk (Step-by-step)
Many find it uncomfortable to negotiate, but remember that the bank makes a lot of money off of you. It's pure business.
- Send a nice, but firm message in the online bank: "Hi! I see that my interest rate is now x.x%. Competitor X is offering y.y%. What can you do with my interest rate for me to stay?"
- Do you get a rejection or a bad offer? Switch banks. It only takes a few minutes, and the new bank fixes absolutely all the practicalities for you.
Ready to check your numbers?
Use our Loan calculator to see exactly how much you can save by lowering the interest rate by just a few decimals.
Go to Loan calculator