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

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 29, 2023)

LVRAverage variable rate**
Monthly repayments ($400k loan, 25 years)
60%6.72%
$2,756
70%6.77%$2,769
80%6.81%$2,779
90%7.11%$2,855

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 34 basis points lower than the average rate on offer with a 90% LVR.

And depending on your loan size and term, that 0.34% 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 $86 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 6.14% p.a. (6.16% 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 6.14% p.a. variable rate (6.16% 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 6.09% p.a. (6.11% 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
  • 6.04% 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. comparison rate*) 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 19 March 2024

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

    Compare
    Details
  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% 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.

    Compare
    Details
  • Mozo Expert Choice Badge
    Fixed Rate Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 2 years
    6.24% p.a.

    Secure a low rate and enjoy the certainty of repayments, with the BCU Fixed Rate Home Loan. Save with no ongoing annual fees. Pay up to $25,000 extra during a fixed period (T&Cs apply). Lock in for up to 5 years.

    Compare
    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

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.