How home loan refinancing could give you a much-needed cash injection in 2020

Olivia Gee

19 Mar 2020

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Despite the financial turbulence of recent months - from the impacts of the summer bushfires to the global economy-altering Coronavirus and the recent RBA rate cuts - there’s a shining light of financial hope for mortgage holders: home loan refinancing. Mozo’s done some digging and found that switching home loan lenders now could provide big returns down the road.

The new Mozo research based on a survey of borrowers has found approximately 81% of Australians have never refinanced their mortgage, despite a switch in home loans potentially saving them up to $100,000. The present financial climate presents an opportune environment in which to refinance, and Mozo’s research has identified how Australian homeowners are missing out on massive savings by not doing so.

Time is money

Borrowers could save more than $100k across the life of their home loan when switching from a bricks-and-mortar bank to a more competitive smaller player. 

“The reward for refinancing is high. From the moment you pick up the phone to signing on the dotted line, the average amount of time it takes to refinance is five days. So if you can save $106K over the term of your home loan, it could feel like you’re pocketing $21K a day during the refinancing process,” says Mozo Director Kirsty Lamont.

That’s a savings of around $3,552 per year over the term of a 30-year home loan just for refinancing with a competitive online lender. A rather pretty penny for a few day’s work.

Your home loan is just as important as your new four walls

Despite the prospect of essentially getting an instant cash prize, people are spending next to no time finding the most effective payment plan for this massive financial commitment. 

Respondents in Mozo’s survey admitted to spending as little as one-two hours securing a home loan, while dedicating more than 50 hours to trawling through property listings for the perfect new pad. Sure, the latter is essential for meeting your ideal home criteria, but continuously monitoring the financial side of the commitment will benefit you and your loved ones for decades to come, even if sums aren’t your strong suit.

“With almost 300 home loans on offer, it can be overwhelming to find the best mortgage for your needs,” says Lamont. “Mozo has done the leg work through the Mozo Experts Choice Awards, identifying the top low cost lenders in the market.” 

Big banks aren’t always best

New things are scary. We get it. But we also get the potential benefits of neobanks and online lenders over some traditional home loan options. Mozo’s research found 65% of Australians would never consider using neobanks and online lenders for a home loan, and 75% have their loans tied to a bricks-and-mortar bank.

Many lenders have passed on the recent RBA rate cuts to customers in full, resulting in record low interest rates for homeowners. According to Mozo’s research, the most competitive interest rate is 2.44% (with last place coming in at 5.60%) for a 80% loan to value ratio home loan. So you best get searching beyond your comfort zone to find the very best deal when refinancing.

RELATED ARTICLE: Australia's best savings and bank accounts for 2020.

If you’re still squirrelling away funds to save up a tidy deposit for your loan, check out Mozo’s comparisons of savings accounts or term deposits.

Refinance your home loan - rates updated daily

  • Promoted

    UBank

    2.59% p.a.

    2.59% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 2.59% p.a.

    • 2.59% p.a.

    • $0

    • 80.00%

    • $200,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Promoted

    loans.com.au

    2.63% p.a.

    2.65% p.a.

    $1234

    Product details Close details
    Smart Home Loan 80

    A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ 20% deposit required. Limited time only.

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $520

    • 2.63% p.a.

    • 2.65% p.a.

    • $520

    • 80.00%

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Home Loan 80

  • Promoted

    Bank of Queensland

    2.69% p.a.

    2.86% p.a.

    $1234

    Product details Close details
    Economy Home Loan Discount Rate

    An ongoing low variable interest rate with free redraw, flexible repayment options and one free valuation. Discounted Economy variable rate available for owner occupier lending with max LVR of 70%.

    • $10.00 monthly

    • $320.00

    • yes - free

    • yes

    • no

    • $450

    • 2.69% p.a.

    • 2.86% p.a.

    • $450

    • 70.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • $2,500 cashback when you refinance your home loan to BOQ, min $250,000, 70% LVR or less. Apply before 15 August 2020.

    Read our Mozo Review to learn more about the Economy Home Loan Discount Rate

  • Promoted

    Newcastle Permanent

    2.94% p.a.

    3.34% p.a.

    $1234

    Product details Close details
    Discounted Variable Home Loan Premium Plus Package

    Enjoy a great low rate with no ongoing fees. Ability to split your loan between fixed and variable. 100% offset account. Extra repayments and redraw facility.

    • $395.00 yearly

    • $0.00

    • yes - free

    • yes - free

    • yes

    • $0

    • 2.94% p.a.

    • 3.34% p.a.

    • $0

    • 80.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Discounted Variable Home Loan

*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 the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. 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.

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