How to get a better deal on your home loan interest rate

WESTPAC is the first of the Big Four banks to hike interest rates, but for those of you who have been affected or could be about to, don’t cop it lying down. Here’s how you can get a better deal.

THE big banks are pushing up interest rates and you are the ones being hit.

Despite interest rates sitting at record-low levels any rate rise still hits borrowers’ hip pockets hard.

The Reserve Bank of Australia kept the cash rate on hold at 1.5 per cent today — it hasn’t moved since August 2016 — but that doesn’t stop banks from jacking up their rates.

This means borrowers have to fork out bigger chunks of cash each month.

MORE: Who has hiked mortgage interest rates?

Just last week Westpac was the first of the Big Four banks to jump out of the gates and hike rates, lifting their standard variable rate to 5.38 per cent.

They revealed they would push up variable rates on all owner occupier and investor principal and interest deals by 14 basis points from September 19.

It’s now the highest of the Big Four banks.

Westpac’s subsidiary banks St George Bank and Bank of Melbourne will also do the same.

And so too will smaller lenders Suncorp and Adelaide Bank.

But for those of you who have been hit by a rate hike or may be about to be hit by one you shouldn’t just cop this lying down.

Instead it should prompt you swing into action and review the deal you are getting.

Here’s what you need to do.

1. CHECK YOUR RATE

Before you do anything login to your internet banking, phone up your lender or pull out your latest home loan statement and find out what interest rate you are paying.

If you're an owner occupier paying principal and interest rate doesn’t start with a “3” in front then you need to start sniffing around for a better deal.

If you’re on a variable rate you have the liberty to switch lenders more easily.

For those of you locked into a fixed rate chances are you will be better off riding out this term and then start looking to switch when this term is nearing an end.

2. LOOK AT OTHER OFFERS

Arming yourself with research is key.

You don’t even have to shift your backside off the couch to do this.

You can hunt for cheaper rates all within the comfort of your own home.

Do some searches online using comparison sites like Canstar, RateCity, Mozo, iSelect and Finder to see what other banks are offering new customers.

There’s a very good chance you’ll be able to get a better deal elsewhere.

Make sure you ask your bank for a better interest rate because if you don’t ask you don’t get.

And see what your bank is offering to new customers, if it’s a better offer than what you are getting you should be hitting up your lender and asking for the same.

Ring up your bank’s direct number, ask for the retention team and explain you want a better interest rate.

3. HELPING HAND

For those of you who don’t have the bravado to talk tough with your bank and do the legwork yourself seek help.

Ask a family member or friend to help you or even engage a mortgage broker.

They can help you look for a better offer and professionals such brokers often know the products inside out.

But be careful before choosing a broker.

You need to make sure they have your best interest at heart and are not just chasing the fattest commissions.

Ask them what kickbacks they get when you talk to them.

4. MOVING BANKS

If your bank still won’t budge and give you a better rate telling them to send you a mortgage discharge form.

This means you are switching your loan to someone else and want to get away from them as fast as humanly possible.

It’s only at this point your friendly banker may start getting wobbly knees and suddenly strike a discount for you.

Good luck!

@sophieelsworth