How to Secure Your Lowest Home Loan Interest Rate

How to Secure Your Lowest Home Loan Interest Rate

Everyone wants a lower interest rate on their home loan—it can make a huge difference and save you thousands over the life of your mortgage. By securing the lowest possible rate, you can also shave years off your repayment period. Here’s how to ensure you get the best deal.

Research is Your Best Friend

Do substantial research to find the right loan, options, and interest rate for you. You can browse lenders' websites, use an online home loan platform, or enlist the help of a professional mortgage broker. A good mortgage broker can save you a lot of stress, time, and money. They often have access to mortgage products that are not easily found by individual consumers.

Make sure to take “comparison rates” into account when looking at various options. Comparison rates include additional fees you may be charged for the loan, providing a more accurate guide to what you’ll actually be paying.

Advertised rates are often not the lowest available. Many lenders are willing to negotiate lower rates than what’s publicly advertised. Don’t be afraid to ask for a better rate. The lending industry is highly competitive, and lenders will often go the extra mile to secure your business or keep you from switching. If they don’t, find one who will.

New Customers Often Get Better Rates

Lenders are always looking to attract new customers and often offer them the lowest rates. Call your lender, mention that you’re considering switching for a better rate, and ask how they can help. They will often offer you a lower rate to keep your business.

Your Negotiating Power

Strengthen your negotiating power with lenders by showcasing:

• A clean credit file and a history of creditworthiness
• A solid savings history
• Employment stability
• A strong repayment history on your previous/current mortgage

Make Sure Your Credit File is Clean

A bad credit history is the most common obstacle to securing a better interest rate. Lenders see blemishes or defaults as higher risk, leading to higher interest rates to cover the potential risk of default. Order a copy of your credit report to check and track any changes. Pay your bills on time and resolve any outstanding debts.

Having no credit history can be almost as detrimental as a bad credit history. Establish a credit history to demonstrate your ability to make on-time payments.

Reduce Your Home Loan to Value Ratio

If you’re applying for a new loan, a larger deposit increases your chances of securing a lower interest rate. Aim for a deposit of at least 20% to avoid Lender's Mortgage Insurance.

For those refinancing or negotiating a better rate on an existing loan, it’s important to show substantial equity in your home and maintain a Loan to Value Ratio (LVR) of less than 80%. This may require a bank valuation to prove the value of your property relative to the amount of your loan.

Welcome Home

At JKL, we’re here to help you navigate the complexities of securing the best home loan interest rate. Our experienced team will support you every step of the way, ensuring you get the best deal for your situation.

Experience our JKL real estate family. We’ll put the welcome mat out for you!