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

By Jasmine Gearie and Maria Gil
Fact Checked
Advertiser disclosure
A young woman is using her laptop and smiling.

Your loan-to-value ratio (LVR) refers to the amount you need to borrow compared to the property’s value, expressed as a percentage.

As you pay down your home loan, your LVR is also likely to decrease, so another way to think of LVR is the percentage of property value that is owned by you (your home equity).

But why exactly can your loan-to-value ratio be such a powerful bargaining chip?

Well, because LVR is one of the metrics used by lenders to assess a borrower’s risk, the lower yours is, the ‘safer’ you’re considered as a borrower.

Therefore, lenders will likely offer their lowest rates to those with lower loan-to-value ratios – that is, those with higher deposits or home equity.

If you’ve been paying down your current home loan 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 your mortgage.

Average variable rates based on LVR – Mozo database as at 11 April 2024

LVRAverage variable rate (p.a.)
Monthly repayments ($400k loan, P&I, 25 years)**
60%6.75% p.a
$2,764
70%6.79% p.a$2,774
80%6.84% p.a.$2,786
90%7.11% p.a.$2,855

Source: Mozo.com.au as at 11 April 2024, using average variable rates for owner occupier, principal & interest home loans at $400,000 across different LVR tiers.

Just how much could you save with a lower LVR? According to Mozo’s data, the average variable rate on offer with a 90% LVR is 7.11% p.a., while an LVR of 70% is 6.79% p.a. – that’s 32 basis points lower.

Depending on the size of your loan and the remaining term, a rate difference of 0.32% could potentially cut down your monthly repayments if you were to refinance.

For instance, on a $400,000 loan being paid off over 25 years, you could potentially save $81 in repayments each month, that’s close to $1,000 in one year.

This is why it’s so important to compare home loans – even after you already have one – to ensure you’re always getting a competitive rate.

The interest rates in the table and the scenario above are just averages, and there are plenty of 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 90%, 80%, 70% and 60% LVRs below.

Refinancing home loans using LVR

90% loan-to-value ratio (10% deposit or equity)

Bendigo Bank Express Home Loan
  • 6.01% p.a. variable rate (6.14% p.a. comparison rate*)
  • Offset account and redraw facility
  • 2024 Mozo Experts Choice Low Cost Home Loan winner

  • $250 establishment fee paid at settlement
  • $10 monthly service fee

Bendigo Bank’s Express Home Loan is available on LVRs up to 90%, making it a compelling choice for anyone with at least 10% equity in their home (or a 10% deposit). Sweetening the deal is the ability to access an offset account and make free extra repayments, both of which could help savvy borrowers save even more on interest. Bendigo’s Express Home Loan is only available online and Bendigo says the approval process can be as little as 1 hour.

80% loan-to-value ratio (20% deposit or equity)

Unloan Variable Home Loan
  • 5.99% p.a. variable rate (5.90% p.a. comparison rate*)
  • Loyalty discount every year for up to 30 years
  • Mozo Experts Choice Low Cost Home Loan winner 2023 and 2024

  • No offset account

Built by CommBank, Unloan offers competitive variable rates from 5.99% p.a. (5.90% p.a. comparison rate*) to mortgage holders with an LVR of at least 80% – that’s a minimum of 20% equity in their home. Unloan’s rates were previously only available to refinancers when it first launched back in 2022, but the lender has now opened its books to new borrowers as of April 2024. Unloan is unique because it offers a 0.01% p.a. discount for each year you’re paying off your loan for up to 30 years (T&Cs apply).

70% loan-to-value ratio (30% deposit or equity)

Macquarie Basic Variable Home Loan
  • 6.15% p.a. variable rate (6.17% p.a. comparison rate*)
  • Make free extra repayments and access redraw facility
  • No upfront or ongoing fees

  • $400 discharge fee
  • Offset account not included
Find out more

Those with an LVR below 70% – that is, at least 30% equity in their home or a 30% deposit – will be able to access Macquarie’s variable rate starting at 6.15% p.a. (6.17% p.a. comparison rate*). The Basic Home Loan allows you to make extra repayments at no cost, and you can redraw if you need to without facing a fee. An offset account isn’t included as standard, but you have the option to add one for an annual fee.

60% loan-to-value ratio (40% deposit or equity)

UBank Neat Home Loan
  • Variable rates from 6.14% p.a. (6.16% p.a. comparison rate*)
  • Extra repayments at no cost
  • No annual fees

  • $250 settlement fee
  • No offset account

UBank’s Neat Home Loan offers variable rates from 6.14% p.a. (6.16% p.a. comparison rate*) to borrowers with an LVR of 60% – at least 40% equity in their home. It’s light on fees, with zero annual fees and the ability to make extra repayments on your loan at no cost. UBank comes backed by NAB, so you can benefit from the savings an online lender can offer, and still get the peace of mind that comes with the backing of a big bank.

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

Compare home loans on Mozo - last updated 20 April 2024

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

    Owner Occupier, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a. variable
    5.90% p.a.

    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 online in minutes.

    Compare
    Go to site
    Details
  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

    Compare
    Go to site
    Details
  • Flex Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.37% 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.

    Compare
    Go to site
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

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

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    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
    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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