Small cuts & big savings: how refinancing your home loan could save you thousands of dollars

Despite the Reserve Bank of Australia (RBA) holding the cash rate at 4.10% since June 2023, home loan lenders continue to chop and change their interest rates, meaning new opportunities for borrowers to refinance are always cropping up. 

According to Mozo’s data in September, it’s a mixed bag of lenders raising rates by as much as 70 basis points (like with many of HSBC’s fixed-rate home loans), and lenders cutting rates by 5 to over 30 basis points. 

It’s within these seemingly small rate cuts that some real savings could be hiding if you’re looking to refinance. 

In fact, if you had a $400,000 home loan calculated at 6.5% p.a. over 25 years, reducing your interest rate by as little as 0.25% p.a. could save you $18,646 in interest by the time you’ve paid off your mortgage. And that’s just by saving an extra $62 per month on repayments.  

That’s money better spent on your retirement, rather than your lender’s.

The importance of being on top of your mortgage 

Home loan interest rates change all the time, not just when the cash rate moves. 

If you get a letter in the mail from your lender saying your variable rate is rising, even if it’s just by 25 basis points, it’s worth negotiating your rate or looking to refinance with a new lender. 

The compounding effect of saving just $62 per month, as we saw in the above example, works out to a significant boost to your finances after you’ve finished paying off your home. 

So, pencil in some time to compare home loan rates every few months to ensure you’re not paying more than you need to.

Check out some of the featured home loans below to get started.