6 mistakes to avoid when refinancing your home loan

By Gabriella Margerison · · 2 min read
Fact Checked
Advertiser disclosure

With what seems like an endless amount of RBA rate rises, it’s little wonder more Aussies than ever are choosing to refinance their mortgages for a better deal. But when making the educated decision to change lenders, there are a few things borrowers should consider before making the switch.

While it’s true; refinancing can be a great way to save money on repayments and reduce the overall cost over the life of your loan, there are still common mistakes borrowers make when navigating the home loan market. So if you think you’re ready to refinance, consider these 6 things, before signing on the dotted line.


  1. Focusing only on the interest rate
    While it can be great shopping around for the lowest rate, borrowers often overlook other important aspects like loan features that could save them even more. For instance, benefits like having an offset account or the ability to make unlimited repayments could be your ticket to paying off your mortgage sooner.
  2. Sticking with the same lender
    Many borrowers who refinance will often ask their existing lender for a better deal, when in fact, shopping around could very well score you a better rate. Being loyal to your bank doesn’t always mean you’re getting the best deal and the process is the same whether you stick to your existing lender or go to a new one. So you could very well be doing yourself a disservice by not exploring your options.
  3. Ignoring the comparison rate
    Borrowers will often only look at the main headline interest rate which represents the annual interest rate, when refinancing their home loan. A better approach is to look at the comparison rate as this is a true representation of what you’ll be paying when you factor things like on-going fees and charges you may incur.
  4. Starting another 30 year loan term
    While it can be tempting to extend your mortgage to 25 or 30 years to reduce repayments, it means that all the progress you have made will have you back to square one if you choose a long loan term. Take advantage of a lower interest rate to pay your mortgage down, so it doesn’t drag on more than it has to.
  5. Using too much of your equity
    If you’ve had your home loan for some time, you have probably accumulated equity or value in your home. Many borrowers use their equity to renovate or make a big purchase, but doing so could be a mistake in the current climate with rising interest rates and the possible decline in home values, so tread with caution.
  6. Choosing the wrong time to refinance
    Time is of the essence, but finding the right time to refinance is key. If for instance you are locked into a fixed loan rate, you’ll want to wait until your fixed term has ended before refinancing as you may incur ‘break-cost’ fees that you weren’t expecting.
    

Ready to refinance your home loan? Check out some top refinance deals below or why not see who made the Mozo Experts Choice Awards for Home Loans winners list in 2023.^

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can compare more home loans here.
Last updated 24 October 2024 Important disclosures and comparison rate warning*

Refinance home loan comparisons on Mozo

Promoted

  • Fixed Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $2,852
    Go to site

    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Fixed Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $2,852
    Go to site

    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    5.59 % p.a.
    Fixed 5 years
    Comparison rate
    6.27 % p.a.
    Initial monthly repayment
    $2,867

    Get repayment certainty with HSBC’s low 2 Year Fixed Rate Home Loan. Make up to $10,000 of extra repayments a year. The option to split your home loan between fixed and variable. Plus, score $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 28 February 2023 and settle by 30 April 2023.

  • 2-Year Discounted - Simple Home Loan Variable

    • Owner-Occupied
    • Principal and Interest
    • LVR<60%
    Interest rate
    5.54 % p.a.
    Variable for 24 months and then 5.99% p.a.
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,988
    Go to site

    Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.

  • Variable Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.98 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $2,991
    Go to site

    Competitive variable rate on up to a 30 year loan term. No application fees to pay. Unlimited additional repayments. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Discounted Home Value Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.99 % p.a.
    Initial monthly repayment
    $2,995

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Receive $3,288 cashback when you refinance an existing home loan. Minimum loan amount of $250,000, settle within 120 days from applying.

  • Simple Home Loan Variable

    • Owner-Occupied
    • Principal and Interest
    • LVR<60%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.99 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    5.99 % p.a.
    Fixed 3 years
    Comparison rate
    6.89 % p.a.
    Initial monthly repayment
    $2,995

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Elevate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.18 % p.a.
    Variable
    Comparison rate
    6.18 % p.a.
    Initial monthly repayment
    $3,056

    Get competitive rates on loan terms of 5 to 30 years with the Aussie Elevate Home Loan. Structure your loan with up to five splits. Make additional repayments (T&Cs apply). Offset accounts available. Unlimited redraw using your online banking account. Choose from weekly, fortnightly or monthly payments For loan amounts from $10,000 to $5 million.

image of houses

Need help with your Home Loan?

Whether you're looking to purchase a new home or refinance your existing loan, our friends at Lendi can help! Lendi’s expert advice is completely free of charge.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Compare home loans