If you think you’re paying too much interest on your home loan, it’s time to have that chat with your lender and negotiate for a better deal.

More than half of Australian are unaware that borrowers with variable interest rates can try to negotiate a lower interest rate with their lender, according to a recent survey by only broking platform Lendi.

Preparation is everything, so before you pick up the phone follow this 5-step guide to help negotiate with your lender.

Research the market

The first step is researching what rates are available from other lenders.  Rates should be for comparable products. If you have an interest-only investor loan, there’s no point comparing it with principal-and-interest loans for owner-occupiers. Do your research and take note of all the possible lenders and their rates.

Talk to the right people

Negotiating a lower rate requires a targeted approach as some bank staff have greater power to reduce your rate than others. If you have a direct banker as a contact, best to go to that banker first. If you approach the branch first and get nowhere, the next best step would be to get on the phone and find the customer retention team – they normally have more latitude to negotiate.

Make your case

Borrowers should explain to the customer retention team the reasons why their rate should be reduced. Explain that you have had your loan with them for x amount of years, made the repayments on time and that the current rate is not within the market. Present yourself as polite and friendly, but you’re certainly not presenting yourself as a pushover. You’re presenting yourself as someone who understands the market.

Call their bluff

If your lender is unable to lower your rate or you feel the reduction does not match the market, it may be a good indication that it is time to refinance. While changing lenders may feel like a hassle, the savings add up over the life of the loan, and sooner you refinance, the more you tend to save.

Use a broker

Alternatively, you may find it simpler and quicker to approach a broker to handle the refinancing process. Brokers facilitate more than half of new mortgages, and are usually able to present borrowers with a range of lenders and products to suit their situation. They can also model how expected savings compare with any break costs to work out the best approach.