New Year’s resolutions to help you tackle your mortgage in 2021

Woman jogging up stairs towards her new year's resolutions

Beyond committing to yet another gym membership or meal plan, New Year’s resolutions are a great opportunity to step back and re-evaluate your financial goals. If you’re a homeowner, that includes your game plan on how to pay off your mortgage sooner. 

But sticking to a big goal like ‘repay a third of my home loan by the end of 2021’ can be tricky. The secret is to break it down into smaller steps. You’ll find that keeps you focused and motivated while moving you towards the ultimate milestone of being mortgage free. 

So to help you stay on top of your mortgage this year and save big on interest, here are four mini resolutions to tick off your 2021 list.

1. Check your mortgage health

Did you know that over half of Australian homeowners don’t know what interest rate they’re paying on their mortgage? 

This is according to the latest study from Mortgage Choice which found that every year fewer Aussies are aware of their home loan rate. That’s despite the fact that for most homeowners, their mortgage would be one of their biggest ongoing expenses.

That’s why doing a health check of your mortgage in 2021 is a crucial goal to have. If you haven’t reviewed your mortgage in the last two years, take the time this year to speak to your lender and find out what your current rate is. 

Given that the official cash rate has fallen by a whopping 0.65% in the past 12 months alone, causing many lenders to follow suit and slash their own home loan rates, chances are your mortgage won’t be as competitive as it once was. 

For instance, since December 2019, the average variable rate in the Mozo database for owner occupiers making principal and interest repayments has dropped from 3.72% to 3.31% - a 0.41% difference. For a $400,000 home loan over 30 years, that gap would mean either saving or losing potentially $32,988 in total interest over the life of the loan.

2. Make the switch

As the saying goes, ‘in with the new, out with the old’. Same goes for your mortgage. If you find you’re no longer happy with your existing rate, then set yourself a goal this year of switching to a better deal.

That could mean negotiating with your current lender, as sometimes getting a discount is as simple as asking for it (read our tips on how to haggle). Or if that doesn’t work, it could mean setting your sights wider, shopping around and refinancing to another lender. 

Either way you’ll be rewarded with an instant pay rise - less interest costs and also lower monthly repayments, giving more wiggle room with your budget. Just be sure you’re in the right financial position to service that new loan (this usually means having a stable income, good credit score, and solid repayment and savings history). 

Curious to see what’s out there? Compare your current offer to a few competitive rates below, or you can visit our refinance home loans hub to weigh up even more options.

Compare refinance home loans - last updated 4 March 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Offset Home Loan

    Package, Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.40% p.a.

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.11% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Straight Up

    Obliterate, Owner Occupier, Principal & Interest, <50% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.24% p.a. variable
    6.24% p.a.

    Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.64% p.a.
    fixed 3 years
    6.52% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.


3. Catch up on repayments

Behind on your mortgage repayments due to the pandemic? You’re not alone, as figures from the Australian Banking Association show nearly half a million home loans with major banks were ‘paused’ in June last year. 

Whether you’ve already resumed your repayments or you've extended your repayment holiday further until 31 March, 2021 will be an important period of playing catch-up with your mortgage. 

Here are a few tactics to help you get back on track faster:

  • Tighten your budget: Look for ways to lower expenses, both big and small. Examples might include replacing takeaway food with homemade meals, moving to cheaper car insurance, or going with a more competitive energy plan. Cutting back on those costs will make it easier to meet future home loan repayments, so you won’t risk default.
  • Switch to weekly payments: Many lenders give their borrowers an option to alter their repayment frequency. While the default is monthly, changing that to fortnightly or even weekly payments can actually save you money in the long run. That’s because interest is calculated daily, so the more regular your repayments, the more often your loan principal gets deducted, and therefore the less interest you pay over the life of your loan. Our home loan repayments guide breaks down this idea further.
  • Pay extra: If you have any money left over, making extra repayments is another savvy way to save big bucks. Say you had a $400,000 mortgage paid over 30 years at an ongoing rate of 3.31%. By contributing an additional $100 every month for five years, you could pay $8,735 less in interest over the life of your loan! Many variable rate loans will allow you to make unlimited extra repayments for free, whereas fixed rate loans tend to be less flexible (e.g. you can only make extra repayments up to a certain amount, or you may not have the option at all). However it’s best to double check the specifics with your lender or on a reputable site like Mozo.

4. Level up your home loans vocabulary

If 2020 put the term ‘repayment holidays’ on your radar, then 2021 could be the time to take the next step. Beyond interest rates, there are heaps of different features that might come with your mortgage (especially if you have a variable rate loan), and learning about them could help you discover perks you didn’t even know existed! 

Take offset accounts as an example. These are similar to bank accounts, except any money you park inside offsets your loan principal amount. For instance, if your current principal is $400,000 but you stash $100,000 in your offset account, then you’ll only need to pay interest on $300,000. So if used wisely, offset accounts can go a long way to helping you save on interest.  

Read about all the other bells and whistles over at our home loan features guide.

* 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.

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