Refinancing? Keep low LVR home loans on your radar

Couple looking at home loan options

Given that $20 billion worth of home loans were refinanced in April, it’s clear many Australian homeowners are jumping at the opportunity to switch to ultra-low rates and save on interest.

When shopping around, it pays for refinancers to remember they have one big advantage over home buyers that could help them snag an even better deal: their loan-to-value ratio (LVR) - or the percentage of their property owed to the bank - tends to be lower. 

That’s because refinancers would have naturally built up equity in their home over the years of paying down their mortgage, therefore owning a larger portion of their property. Not to mention, their property value may have also gone up due to a renovation or increased demand in the area.

Having a lower LVR could then open your door to cheaper rates, which borrowers with a standard 20% deposit aren’t able to access. As Mozo has previously reported on, there’s been an interesting trend of lenders serving up their top rate discounts to customers with LVRs up to 60%. 

While comparing average variable rates of 80% LVR and 60% LVR loans in the Mozo database won’t shed much light on this trend (there’s just a 0.07% difference), a closer look reveals that a number of online lenders continue to offer their sharpest rates to lower LVR customers.

Take Athena’s AcceleRATES Variable Home Loan, for instance, which automatically rewards borrowers with better rates as they pay down their mortgage and enter lower LVR tiers.

In addition to Athena’s offer, here are our top editorial picks for refinancers with at least 30% or 40% in home equity:

Top 70% LVR home loan deals

Loans.com.au Smart Booster Home Loan
  • 1.85% discounted variable rate for 2 years (2.21% comparison rate*)
  • No application or ongoing fees
  • Optional offset account (extra interest applies)

Online lender loans.com.au is offering a killer deal to owner occupiers borrowing up to $1 million with at least 30% in home equity. For the first two years, you’ll receive a variable rate of just 1.85% (2.21% comparison rate*) before it reverts to a still competitive 2.25%. There are no application or ongoing fees to worry about (although a couple of other upfront fees apply), plus you get to make as many free extra repayments as you’d like, with the option to redraw those funds should you need to. An offset account is also available with an additional 0.10% interest, to help you save even more on interest.

Bluestone Prime Home Loan
  • Variable rates from 2.44% (2.49% comparison rate*)
  • Free extra repayments and redraw facility
  • No ongoing fees

Whether you freelance or work full-time, Bluestone’s Prime Home Loan is open to both self-employed and PAYG employees. Variable rates start from a low 2.44% (2.49% comparison rate*) for owner occupiers with LVRs up to 70%, and you’ll also have a range of useful features at your disposal. This includes unlimited free extra repayments and redraws and a split loan option that lets you access the certainty of fixed rates without having to sacrifice the flexibility of variable rates. With this loan, you can borrow up to $2.5 million. You won’t have to pay any ongoing fees, although there are a couple of upfront fees to budget for.

Yard Variable Home Loan Special
  • Variable rates from 1.99% (2.02% comparison rate*)
  • Optional offset account ($10 per month)
  • No application or ongoing service fees

Love the sound of a rate that starts with ‘1’? Then you’ll love this special offer from Yard, which comes with variable rates from 1.99% (2.02% comparison rate*) for owner occupiers with at least 30% in home equity borrowing up to $1.5 million. But get in quick, as the deal lasts until 31 July 2021. With this home loan, you can wave goodbye to application and ongoing fees and say hello to a bunch of handy features including free extra repayments, a redraw facility and an offset account which is available for $10 per month. Just watch out for a few other upfront fees that may apply.

Top 60% LVR home loan deals

Athena Celebrate Variable Home Loan
  • Variable rates from 1.99% (1.99% comparison rate*)
  • Automatic rate discounts as loan is paid off
  • Zero upfront or ongoing fees

For borrowers with 40% in home equity, Athena is offering one of the most competitive variable rates in the Mozo database - 1.99% (1.99% comparison rate*) - for amounts of up to $2 million. Besides a great rate, you’ll also pay no upfront or ongoing fees whatsoever, and get your money’s worth with features including free extra repayments, a free redraw facility, and the choice of weekly, fortnightly or monthly repayments to match your pay cycle. Just bear in mind this loan can only fund homes in capital cities or major population centres.

Macquarie Basic Home Loan
  • Variable rates from 2.34% (2.34% comparison rate*)
  • Earn 10k Qantas Points per 100k borrowed (extra interest applies)
  • No upfront or ongoing service fees

A low-rate home loan that also helps you build up Qantas Points for your next flight? Look no further than Macquarie, which rewards its borrowers with a 60% LVR in more ways than one. On top of minimal fees and competitive variable rates from 2.34% (2.34% comparison rate*), you’ll also have access to features including free extra repayments and redraws, a split loan account and even the option to take a repayment holiday. And for the price of 0.05%, you’ll receive 10k Qantas Points for every $100k borrowed (up to a $5 million maximum) and 25k Qantas Points on your third and fifth anniversary. If you’re refinancing over $150k, you’ll also receive 1,000 Qantas Points per month.

Homestar Star Gold Home Loan
  • Variable rates from 1.79% (1.84% comparison rate*)
  • Free offset account
  • Free extra repayments and redraws
Find out more

If saving money is your top priority, then you may want to keep Homestar’s Star Gold Home Loan on your list. Its variable rate is one of the lowest in the Mozo database, starting from a jaw-dropping 1.79% (1.84% comparison rate*) for owner occupiers. You’ll need at least 40% in home equity to snag this deal, but in return, you’ll also have access to a whole range of flexible features for free, including an offset account, extra repayments and a redraw facility. This loan is available for refinancers borrowing between $250k and $850k. There are no ongoing fees to worry about, but you will need to factor in a few upfront fees, including an application fee.

Interested in shopping around some more before you pick your next home loan? Then head on over to our refinance home loans comparison hub for even more options.

* 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, loan amount and term entered. 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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