How refinancing your home loan in 2021 could save you thousands


If you’re set on looking at your finances with a fresh focus in 2021, honing in on your biggest savings opportunity could be the place to start.

For many Australians that’s their home loan. A mortgage in the hundreds of thousands of dollars is likely to be the largest debt most people ever have, which means even a small interest rate reduction could provide significant savings - particularly over the long term.

The thing is, plenty of mortgage holders are paying more than they need to on their home loan.

“A significant number of Australian home loan borrowers have not switched lenders for several years, yet they stand to save so much money by doing so,” said ACCC Chair, Rod Sims, in the wake of the consumer regulator’s home loan price enquiry released in December.

So, if this is the first time you’ve checked in on your home loan rate in recent years, you might be in for a shock, because rates have shifted greatly and your own rate might not have kept up.

Difference in average owner occupier rates (Source: Mozo database)

March 2019March 2021Change
1-year fixed4.00%2.33%-167bp
3-year fixed4.02%2.34%-168bp
5-year fixed4.45%2.62%-183bp

As the table above shows, the drop in the average variable and fixed home loan rates has been substantial, even in the last two years.

So the big question is: has your own rate kept pace with these changes? If not, you’ll probably be curious as to how much you could potentially save by refinancing to a better deal.

How much could you save with a lower rate?

To showcase the potential savings on offer for refinancers, here’s a scenario using owner occupier borrowers Mya and Ken. The couple currently have an outstanding mortgage of $400,000 and a variable rate of 3.31% which they’re planning to pay off by making principal and interest repayments over 20 years.

At that rate - according to our home loan repayments calculator - Mya and Ken would need to make monthly repayments of $2,281, and over the life of the loan they would end up paying $147,434 in interest alone.

However, here’s what those numbers would look like if the pair were able to refinance their home loan to a variable rate of 2.50% - a rate which is low, but by no means the lowest in our database at present:

  • Their monthly repayments would drop to $2,120 - $161/month less
  • The amount of interest they would pay over 20 years would fall to $108,707 - $38,727 less
  • Assuming they were able to refinance in the next few weeks, Mya and Ken would be able to save over $1,700 in monthly repayments in 2021 alone

That’s a significant difference, even in the short term.

Of course, refinancing won’t be the right move for every mortgage holder. Some borrowers will already be on a competitive interest rate, while others may be unable to refinance because of their financial situation - so called ‘mortgage prisoners’.

There are also additional costs to weigh up against the potential savings on offer from refinancing, including any discharge or break cost fees from your existing lender, or new fees that you’ll be charged by a new lender.

If you are interested in refinancing, get started by plugging in a few numbers from your current home loan to our switch and save calculator, or compare rates on loans from over 80 different lenders yourself by heading over to the Mozo home loan comparison hub. 

Home loan averages come from loans tracked in the Mozo database which are based on an owner occupier making principal and interest repayments on a loan of $400,000 with an 80% LVR. Check out the Mozo home loan statistics page for more information.

Refinance home loans - last updated 6 December 2023

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
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    interest rate
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    Initial monthly repayment
    6.04% p.a. variable
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* 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

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