How I'm Saving $87 a Week (or $4,500 This Year) on My Home Loan

Kirsty Lamont

22 Nov 2017

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How competitive is your home loan rate?

  • Lenders are offering variable rates well below 4%

  • Huge savings on offer for borrowers prepared to ditch and switch

As a Director at comparison site Mozo.com.au, I consider myself to be pretty on top of my finances. So you can imagine the shock I got recently when reviewing my home loan rate to find that it had become seriously uncompetitive.

When I took out this loan with a smaller bank a few years ago, the rate delivered a serious saving on my previous loan. Secure in the knowledge I’d secured a great deal, I stopped paying close attention to my mortgage and focused on other things.

And that’s where I went wrong, because over the next couple of years my new lender proceeded to hike our rate little by little and hold back part of the Reserve Bank’s rate cuts over the same period.

I had become a victim of that time honoured tradition of banks fattening profit margins and was now paying 4.27% - more than 60 percentage points higher than the best rate on the market.

I knew there were now stacks of lenders offering rates below 4.00%, and after comparing the best loans decided to go with an online lender offering a super low variable rate... check out what's on offer in the comparison table below and then read on for the rest of my story.

Low Rate Home Loans – May 2018 - rates updated daily

  • Promoted

    Macquarie

    2.54% p.a. variable

    2.81% p.a.

    $1234

    Product details Close details
    Offset Home Loan Package

    Handy offset account to help pay your home loan off sooner. Up to 10 offset accounts per loan account available. Fee free access at ATMs. Waived credit card annual fee. $0 international purchase fees.

    • 2.54% p.a. variable

    • 2.81% p.a.

    • $0

    • $248.00 yearly

    • $400.00

    • yes - free

    • yes - free

    • yes

    • $0

    • 70.00%

    • $150,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Monthly

    Read our Mozo Review to learn more about the Offset Home Loan

  • Promoted

    loans.com.au

    2.48% p.a. variable

    2.50% 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.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.

    • 2.48% p.a. variable

    • 2.50% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • $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

    HSBC

    2.09% p.a.
    fixed 2 years

    2.98% p.a.

    $1234

    Product details Close details
    Fixed Rate Home Loan

    Have the security of a fixed rate for 2 years with the option to split with one of the HSBC variable Home Loans. No ongoing monthly service fees or annual fees. Mozo Experts Choice Fixed Home Loan 2020^

    • 2.09% p.a.
      fixed 2 years

    • 2.98% p.a.

    • $0

    • $0.00

    • $300.00

    • yes - free up to $10,000 p.a.

    • no

    • no

    • $0

    • 80.00%

    • $50,000

    • $7,500,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

  • Promoted

    Athena

    2.34% p.a. variable

    2.34% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    • 2.34% p.a. variable

    • 2.34% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 60.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

  • Promoted

    Hot Deal Up to $1,500 cash back on refinances (T&Cs apply)

    Homestar

    2.29% p.a. variable

    2.32% p.a.

    $1234

    Product details Close details
    Star Essentials Home Loan

    Low Cost Home Loan 2020 winner.^ A home loan packed with all the essentials and offering up to $1500 cashback and no ongoing fees. No Construction loans.

    • 2.29% p.a. variable

    • 2.32% p.a.

    • $515

    • $0.00

    • $535.00

    • yes - free

    • yes - free

    • no

    • $515

    • 80.00%

    • $150,000

    • $850,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinances receive up to $1,500 cashback or upfront fees waived on purchases for applications received by 31 October 2020 and settled by 31 January 2021.

    Read our Mozo Review to learn more about the Star Essentials 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.

Was it all worth it?

I’ve just completed the refinance process and sure, while there were some minor hassles with sending in paperwork and organising to be at home for the valuer, the time involved was actually quite minor when you consider the size of the savings. $87 a week to be precise, or just over $4,500 a year.

If that’s not worth putting in a few hours on paperwork then I don’t know what is!

The kicker in all of this is that a week before the refinance went through, I received a letter from my soon to be old lender advising of yet another rate increase. Not this time suckers!

So, if you haven’t reviewed your home loan rate lately I’d strongly advise you do. Who knows how much you could save by switching?

Rates correct at time of writing. How much you could save by refinancing your home loan depends on your personal circumstances.

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