Refinancing your home loan: Why LVR could be your best bargaining chip

By Maria Gil and Amelia Hetherington
Fact Checked
Advertiser disclosure
woman-sitting-on-steps-looking-at-mortgage-on-phone

With competition in the home loan market running red hot, some lenders are standing out from the crowd by offering their lowest rates to borrowers with lower loan-to-value ratios (LVRs).

LVR refers to the percentage of property value that is still owed to your lender, so as you pay down your home loan, your LVR is also likely to decrease. But why exactly can your loan-to-value ratio be such a powerful bargaining chip?

Well, LVR is one of the metrics used by lenders to assess a borrower's risk, and the lower the LVR is, the ‘safer’ a borrower is considered.

All of that means that if you’ve been paying down your current mortgage for a few years now and you’ve managed to lower your LVR, you could be in a position to score a better rate if you choose to refinance.

Average variable rates based on LVR - Mozo database (November 1, 2023)

LVRAverage variable rate**
Monthly repayments ($400k loan, 25 years)
60%6.53%
$2,708
70%6.57%$2,718
80%6.61%$2,728
90%6.92%$2,807

Bear in mind that the averages above are based on advertised rates only.

Just how much lower could that rate be? Well as the Mozo data above shows, if you were to refinance your home loan with a 70% LVR the average variable rate you could potentially snag at the moment is 35 basis points lower than the average rate on offer with a 90% LVR.

And depending on your loan size and term, that 0.35% rate difference could potentially help cut down your monthly repayments. For instance, on a $400,000 mortgage being paid off over 25 years, you could save $89 in repayments per month.

Of course, the rates in the table and scenario above are just averages - there are also plenty of even lower rates available to mortgage holders with lower LVRs who are looking to switch their loans.

To give you a taste of the options out there, we’ve wrapped up a number of competitively priced loan deals for 60%, 70% and 80% LVRs below. 

 

LOW LVR REFINANCING DEALS

<60% LVR

Macquarie - Basic Home Loan
  • Variable rates from 5.89% p.a. (5.91% p.a. comparison rate*)
  • No upfront or ongoing fees
  • Repayment Holiday

Maybe getting a competitive rate from a well-known bank is something that you’re after, and you might find that with Macquarie’s Basic Home Loan. Get a 5.89% p.a. variable rate (5.91% p.a. comparison rate*) if you’re an owner occupier (<60% LVR), and take advantage of features like extra repayments and redraws. Not to mention, there’s also a repayment holiday option for borrowers needing to take a break from their home loan repayments (T&Cs apply). While there’s a $400 discharge fee, there are no upfront or ongoing fees which potentially leaves you with a bit more money to pay off this loan quicker.

ubank - Neat Home Loan
  • Variable rates from 5.84% p.a. (5.86% p.a. comparison rate*)
  • Fast and paperless online application process
  • Free extra repayments and redraws

UBank is one of the top online banks in Mozo’s database, with a loan offer that could give borrowers bang for their buck. Not only does this low cost digital home loan reward borrowers with a lower loan-to-value-ratio (LVR), the rates are sharp and the fees are light. You can make repayments with more flexibility, with options to do so on a weekly, fortnight, or monthly basis. Plus, if you like the sound of free extra repayments and a redraw facility, this loan comes with these features too! UBank is also backed by NAB so you get all the saving perks an online lender can offer, while having the security of a big bank backing. Something to keep in mind though is that a term longer than 30 years is only available to new purchase applications. 

<70% LVR

Qudos Bank - No Frills Home Loan
  • 2023 Mozo Experts Choice Award winner
  • 5.69% p.a. variable and comparison rate*
  • Zero application or ongoing service fees
Find out more

Want a home loan that has zero application, settlement, legal or ongoing fees? Then Qudos Bank’s no frills variable rate home loan could be something to look at. This loan is available to mortgage holders with an LVR of 70% or less, and includes features like free extra repayments and redraws. A favourite with borrowers looking to find an alternative to the big four banks, this home loan offer may be worth considering. 

<80% LVR

Unloan
  • 2023 Mozo Experts Choice Award winner
  • Variable rates from 5.74% p.a. (5.65% p.a. comparison rate*) for LVRs under 80%
  • Annual rate discount (T&Cs apply)
  • Free extra repayments and redraws

Refinancers can access rates as low as 5.74% (5.65% p.a.) with Unloan, the digital home loan from Commonwealth Bank. What’s more, this offer is available for borrowers with at least 20% equity in their homes and you can benefit from loyalty rewards like an interest rate reduction of 0.01% every year, up to a maximum of 0.30% (T&Cs apply). Do note that while an offset account isn’t offered, you’ll be able to retrieve any extra repayments you’ve made at no cost. 

Interested in seeing how these lower LVR offers compare to other home loans for refinancers? Start comparing even more deals by heading over to the Mozo refinance home loan comparison hub today.

Home loan comparisons on Mozo - last updated 28 November 2023

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Featured Product
    Mozo Expert Choice Badge
    Unloan Variable

    Owner Occupier, Refinance Only, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    5.74% p.a. variable
    5.65% p.a.

    For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.

    Go to site
    Details
  • Home Variable Rate

    Owner Occupier, Principal & Interest, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    5.90% p.a. variable
    5.90% p.a.

    Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.

    Go to site
    Details
  • Offset Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.39% 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.

    Go to site
    Details
  • Flex Home Loan

    Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.19% p.a. variable
    6.43% p.a.

    Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.

    Go to site
    Details
  • 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.

    Go to site
    Details

* 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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