How to manage higher mortgage repayments

Sydney terrace houses

Following the RBA’s decision to increase the cash rate by 25 basis points to 0.35%, many banks have begun to increase their variable home loan rates.

If you have a variable home loan, chances are you might be seeing at least a 0.25% increase in the next couple of weeks. 

The increase might seem small but can potentially leave you short $1,000 a year.

Let’s look at the example below:

  • If you have a variable interest rate of 1.99% p.a. for a $600,000 loan with a 25 year term. Then your mortgage repayment would be about $2,540 a month.
  • With the 0.25% interest rate increase, your rate now sits at 2.24% p.a. making your monthly repayments go up to $2,614. That $74 difference is about $888 extra a year!

Now, while that might not seem like a big deal at a glance, that extra $888 could equal about two months of groceries, two to three months of car repayments, a budget for Christmas presents or a holiday to Fiji.

Related: What do higher interest rates mean for property prices?

Also, chances are that the 0.25% hike is not going to stop there. Mozo’s banking expert Peter Marshall believes that the cash rate might go up to 0.50% total. That would mean an extra 0.15% increase on the horizon.

  • If you start with a 1.99% variable rate, your new rate might go to 2.39% p.a., making your monthly repayments go up to $2,659–an extra $119 a month. That’s about $1,428 extra out of your pocket annually.

If the increase has you nervous, we’ve got your back. We’ve gathered some tips on how to manage higher mortgage repayments.

Tips on managing a higher mortgage repayment

family sitting on the porch of their house

Rejig your budget

For starters, it might be time to take a good look at your budget and see where you can make cuts without making massive changes to your lifestyle. This could be reducing the number of times you get takeaway, unsubscribing to a streaming service you hardly use, or finding cheaper alternatives for your phone plan, broadband or energy bills.

Every little bit helps and if you can shave off more than you were expecting, it might be good to put in a high interest savings account.

Consider refinancing

If you’re displeased with your current interest rate consider trying to negotiate for a cheaper one with your lender. If that doesn’t work you can always switch to another lender. You can go to our refinancing comparison page to get you started.

Just keep in mind that refinancing may come with several upfront fees. Some to watch out for include: break fee, valuation fee and a new application fee.

Consider an offset account

An offset account is like an everyday bank account, but it's linked to your home loan. A big benefit of having an offset account is having the balance offset daily against the loan’s principal. This helps bring down the amount of interest you pay.

For more information, check out our home loan refinancing page for tips, guides and home loan comparisons. Alternatively, you can use our rate calculator to see how your repayments might increase.

Loan details

Rate change

Repayment change if rates go up

Home loan comparisons on Mozo - last updated 9 December 2023

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Mozo Expert Choice Badge
    Variable Rate Home Loan Special Offer

    Package, Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.51% p.a.

    Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.

  • Well Balanced Special Offer

    Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.12% p.a. variable
    6.14% p.a.

    Competitive low rates available for owner occupiers. Free online redraws. 100% offset account for a small fee ($10 p/mth). Quick and easy application online. Get a free evaluation (Valued up to $300). Minimum loan amount $100K.

  • Mozo Expert Choice Badge
    Variable Home Loan 90

    Principal and Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.04% p.a. variable
    6.06% p.a.

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required. Advertised rates include Nov RBA rate increase. T&Cs apply.

  • Simplicity PLUS Special Offer

    Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.64% p.a. variable
    6.64% p.a.

    Refinance your eligible home loan of $250,000+ and 80% or less LVR and get $2,000 cashback (T&Cs apply) with ANZ’s Simplicity PLUS Home Loan Special Offer. Get discounted rates upfront on eligible loans (T&Cs apply). $0 set up or ongoing fees to pay. Verify your ID and sign documents online for super simple home loan refinancing.

  • Elevate

    Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.20% p.a.

    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.


* 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.