How do I renegotiate my mortgage?

Women with CentsBlog, Mortgage

Today’s question comes straight from our community and I’ll be discussing what to expect when calling the bank to ask for a better rate on your home loan!

“Hi Tash, I have a question about how best to negotiate your mortgage. I am also pregnant so refinancing isn’t possible, but negotiating sounds hard and I don’t know what they’ll ask me and what to expect out of that conversation. Any advice would help, thanks!”

First of all, congratulations on the upcoming arrival of your little bub! Gosh I miss those early cuddly days!

Ok so here is what you need to know about renegotiating your rate.

#1. You have nothing to lose by asking

Calling the bank is a daunting thought to many, but the truth is that there is nothing to be afraid of. You are an existing customer not feeling happy with their current home loan. At best, you will be offered a great discount (a WWC member recently did just that and her rate dropped from 4.86% to 3.72%!). At worst, they will tell you that your rate is the best that they can do at the moment. Quite likely they will offer you a fixed rate as an alternative to a discount on your variable rate. I discuss the pros and cons of fixed rates here.


So to negotiate the rate all you need to do is know what some of the current rates in the market are (Check out comparison sites like Mozo and Finder) and say to the person at the other end “I am not happy with my current interest rate. I have seen rates around as low as X and would like to know what is the best rate you can offer me?” and see what they say.

#2 You do not have to divulge anything

At this stage the bank is unlikely to be asking you for any personal information such as your employment situation, existing debts, etc. This conversation is purely about what they can do for you (as such I would be keeping ‘mum’ on the whole mat leave thing). Even if they do ask, simply say something like ‘I am not prepared to discuss that at the moment, I am simply interested in the rate you can offer to keep my business’.

#3 You do not have to commit to anything

At this point you do not have to accept their offer. And if the conversation doesn’t go as well as you hoped there is nothing stopping you from calling back and seeing if a different person gives you a different response. They may try to get you to switch to another one of their home loan products in order to access the better rate – this may involve just signing a product switch form and potentially paying a fee, or they may advise that you need to apply to refinance.

Keep in mind that refinancing is an involved process and if you are currently on (or soon to be) on maternity leave, may not be the best idea. This is because many banks won’t factor in your maternity leave or return to work income while you are on mat leave meaning that your application may be declined (having said that, depending on the circumstances there may be options available, so it is best to speak with a mortgage broker in this regard).

#4 Know the trigger words

If you aren’t happy with what is on offer, you can always inform the customer service officer that you will go to another lender. Doing something as simple as asking where you can obtain a copy of the bank discharge form (so that you can switch banks) may be enough for you to be transferred to the retention team who may have approval to offer higher discounts. However, in my experience, these days many banks wait for the discharge form to be submitted before they will jump to try to keep your business. In any case, you have nothing to lose by asking – simply obtaining the form itself will not affect your mortgage in any way so long as you don’t submit it.

If you would like more money tips including how to get the most out of your mortgage, check out my new book Wonder Woman’s Guide to Money (available in paperback and kindle format).

p.s. If you are thinking of refinancing and need a helping hand, Women with Cents can help! Just email tash@womenwithcents.com.au and arrange an obligation free chat.

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