6 hacks to save you $100k on your home loan

Australians are in the midst of the most aggressive rate hiking cycle since the early 1990s, but Mozo’s research has found it’s possible to save over $100,000 on your mortgage using six home loan hacks.

Mozo’s Home Loan Report for 2024 found that 42% of mortgage holders surveyed didn’t know their home loan interest rate, yet homeowners could save hundreds of dollars a month by switching to a lower rate – here’s how.

Hack #1 – look beyond the big banks

Despite having higher rates on average, CBA, Westpac, NAB and ANZ lay claim to 73% of the owner occupier home loan market – switching to a smaller provider is one easy way you could save.

For example, the average variable home loan rate from a big four bank is 7.48% as of March 20, but Mozo’s database shows the average variable rate across all lenders is 6.82%. That means there’s a huge opportunity to save on your home loan by looking at lenders beyond the Big Four. 

Mozo’s Experts Choice Award Winners for Home Loans had an average rate of 6.10%, which on a $500k loan equates to a $436 per month repayment saving in comparison to the big banks.

The big winners were largely customer-owned banks, with People’s Choice bank taking out Home Loan Lender of the Year for 2024. See our full list of winners.

Hack #2 – bank with an offset account

Mozo’s analysis found that 46% of Aussie home loan holders don’t use an offset account, but this is another way to reduce the amount you’ll pay in interest over the life of your loan.

An offset account is similar to a bank account and comes linked to your home loan. If you have $50,000 in an offset account linked to a $500,000 loan, you’ll only be charged interest on $450,000.

If you were paying an interest rate of 6.82% on this home loan with $50,000 in an offset account, you could potentially save $284 on your repayments each month.

Hack #3 – compare your interest rate regularly

Mozo’s survey found that 20% of mortgage holders hadn’t compared their rate since first getting their home loan, which means they could be overpaying in interest.

To take one example, Mozo found that Aussies who compared home loans every 6 months secured an average rate of 6.14%, while those who hadn’t compared since first taking out a home loan were paying 6.52% on average.

That shakes out to be $118 more a month on a $500k loan.

“A home loan is decades of debt, and interest on home loans is calculated daily,” says Mozo’s finance expert, Rachel Wastell. “So even the smallest difference in rates can save you hundreds of dollars a month.”

Hack #4 – increase how often you pay

A lesser known hack that could save you thousands is updating how often you repay your home loan. Mozo’s research found that switching from monthly repayments to fortnightly instalments can save you over $100,000 in interest over a 25-year loan.

How does this work? Take a loan of $500,000 over 25 years at a rate of 6.82% – if you were to switch from 12 monthly repayments of $3,477 to 26 fortnightly payments of $1,738.50, you would save $111,050 over the life of the loan.

Hack #5 – consider a split rate loan

You might be most familiar with fixed rate home loans and variable rate home loans, but there is another type – split rate loans. 

These combine fixed and variable interest rates, and they can provide stability and adaptability for borrowers by allowing them to hedge their bets against the RBA.

Hack #6 – earn income from your home

Got a spare room in your home, or a parking space you’re not using? Maybe you’ve got a swimming pool that you’re happy for others to use?

There are now plenty of services online that can help you rent out a room, a garage or driveway, or even your swimming pool that could potentially earn you an extra $400 a month.

That’s money you can put towards your mortgage. Be sure to consider your neighbours, comply with ATO tax regulations, government regulations and make sure you have the right insurance coverage.

If you’re ready to find a better home loan, start comparing some of the best home loans on the market below.