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While refinancing usually isn’t as complicated as it may seem, it’s understandable that homeowners may want to avoid the process. However, just because you don’t want to refinance, it doesn’t necessarily mean that you can’t score a lower interest rate.

If your interest rate isn’t as competitive as it could be, you may be in a position to get your lender to lower it without having to fully refinance your home loan. In this article, we’ll explain how to reduce your interest rate without refinancing and the signs that indicate you might be eligible for a lower rate.

## Negotiating with your lender for a lower rate

To reduce your interest rate without refinancing, you’ll need to negotiate with your current lender. With interest rates being at record lows right now, it’s likely that your lender is offering better interest rates to newer customers. It’s a good idea to always check and compare your interest rate with the new rates your lender is offering. Don’t forget to check what other lenders other lenders are offering! 

If you see that your lender is offering lower interest rates, you could:

__1. Call your lender up and ask for a lower rate__

If you have demonstrated that you are a good, low-risk borrower, it’s likely that your lender will be happy to talk about reducing your interest rate if you ask. Be confident and assertive and request the lower rate that new customers are offered. 

For lenders to seriously consider reducing your rate, you will need to prove yourself to be a reliable borrower with a good credit rating and history of making on-time repayments. 

__2. Speak to a Lendi expert who can do a rate review for you__

Our experts can walk you through the rate reduction process by conducting a rate review for you. With our Same Lender Review service, they can compare your interest rate to the rates your lender is offering for new customers and assess how likely you are to be eligible for a lower rate. 

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__3. Ask a mortgage broker to negotiate on your behalf__

If you would feel more comfortable having an expert negotiate on your behalf, our [Home Loan Specialists](https://www.lendi.com.au/book-appointment/) are happy to help. After conducting a rate review and having a chat with you over the phone, our experts will have a better picture of who you are as a borrower and may be able to justify to your lender why you should have a lower rate. 

- __Related:__ [How to negotiate a lower interest rate on your home loan](https://www.lendi.com.au/inspire/finance/how-to-negotiate-a-lower-interest-rate-on-your-home-loan/)

## Signs you might be eligible for a lower rate

There are a few signs you should look out for that could make you eligible for an interest rate reduction. You can talk about these signs when negotiating to give you more credibility in your argument. 

__1. Your rate is more than a year old__

Interest rates are currently at a record low, meaning that borrowers who got their loan even  just a year ago could be paying more in interest than they need to. It’s important to regularly check and compare your interest rate with the newer rates your lender and other lenders are offering. 

__2. Your equity has grown since you got your loan or last refinanced__

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Equity tells you how much of your property you own outright. It’s not just calculated based on how much of your loan balance you’ve paid off. It’s calculated by determining the difference between your loan balance and the current value of your property. 

Since property values fluctuate, you may be surprised about how much equity you have. Renovations, home improvements and changes in the property market can all influence your equity. A higher equity can indicate to lenders that you are good at making repayments or, for example, that your home is in a high-growth area that would make it easy to sell should you default on your repayments. 

- __Related:__ [guide to equity home loans](https://www.lendi.com.au/guides/equity-home-loans/)

__3. Your credit has improved since you first got your loan__

If you got your loan when you had bad credit, it’s possible that your lender gave you a higher interest rate to offset the risk. With an improved credit rating, you might find yourself with a little bit more bargaining power in negotiations. 

Lenders will be less likely to view you as a risky borrower and may grant you a lower interest rate. Bear in mind that you will probably need to be able to demonstrate a consistent improvement in your credit over an extended period of time. There are a number of ways to improve your credit rating, but an important one is making your repayments consistently on-time. 

__- Related:__ [6 ways to improve your credit score quickly](https://www.lendi.com.au/inspire/finance/6-ways-to-improve-your-credit-score-quickly/)

## Know when it might be time to find a new lender

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If your lender won’t budge in negotiations, it might be time to consider refinancing. While it can be perceived as a daunting process, it is a very normal and smart thing to do every couple of years. The Reserve Bank of Australia (RBA) confirmed earlier in the year that many Australian homeowners are being charged a [‘loyalty tax’](https://www.lendi.com.au/inspire/insights/aussies-being-charged-banks-loyalty-tax-central-bank-confirms/) by banks, so consider shopping around for a more competitive interest rate.

Other lenders may have better interest rates and better overall loan packages. You may end up preferring your new lender and wishing you had refinanced sooner!

You can easily search and compare home loans from over 35 Australian lenders with Lendi. Once you find a loan that suits you, you can easily apply on our website. Our [Home Loan Specialists](https://www.lendi.com.au/book-appointment/) are on hand to guide you through the process and answer any questions you might have.

## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/)

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*