The simple mortgage mistake draining Aussie budgets

Kelly Emmerton

15 Mar 2018

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How long has it been since you’ve done a home loan health check? Five years? Ten? Chances are, it's been way too long. 

Getting complacent about your home loan is a big mistake, and unfortunately, an easy one to make. By not regularly reviewing your current home loan and checking to see if there’s a better deal out there, you could potentially be doing serious damage to your bottom line.

“Sticking with the same home loan for 25 or 30 years is the easy route - but it’s not always the best one. There are potentially tens of thousands of dollars in savings for those who are willing to put in a little bit of time and find a better deal,” says Mozo Director Kirsty Lamont.

Great value home loans in March 2018

Rates updated daily. Advertiser disclosure.

  • loans.com.au

    2.48% p.a. variable

    2.50% p.a.

    $1234

    Product details Close details
    Smart Home Loan 80

    A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.

    • 2.48% p.a. variable

    • 2.50% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • $520

    • 80.00%

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Home Loan 80

  • HSBC

    2.09% p.a.
    fixed 2 years

    2.98% p.a.

    $1234

    Product details Close details
    Fixed Rate Home Loan

    Have the security of a fixed rate for 2 years with the option to split with one of the HSBC variable Home Loans. No ongoing monthly service fees or annual fees. Mozo Experts Choice Fixed Home Loan 2020^

    • 2.09% p.a.
      fixed 2 years

    • 2.98% p.a.

    • $0

    • $0.00

    • $300.00

    • yes - free up to $10,000 p.a.

    • no

    • no

    • $0

    • 80.00%

    • $50,000

    • $7,500,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Fixed Rate Home Loan

  • Athena

    2.34% p.a. variable

    2.34% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    • 2.34% p.a. variable

    • 2.34% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 60.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Celebrate Variable Home Loan

  • UBank

    2.49% p.a. variable

    2.49% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.

    • 2.49% p.a. variable

    • 2.49% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 80.00%

    • $100,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Hot Deal $2,000 Refinance Cash Bonus (T&Cs apply)

    Suncorp

    2.68% p.a. variable

    2.69% p.a.

    $1234

    Product details Close details
    Back to Basics Special

    No monthly account keeping fee, no ongoing annual fee and no loan establishment fee on new lending of $150,000 or more. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.

    • 2.68% p.a. variable

    • 2.69% p.a.

    • $0

    • $0.00

    • $350.00

    • Yes - free

    • yes - free

    • no

    • $0

    • 80.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinance from another lender to receive a $2,000 cash bonus for loans of at least $250,000 or $3,000 bonus for loans over $750,000. Available for loans with an LVR <90% and applications made by 18 December 2020 and settled by 26 March 2021.

    Read our Mozo Review to learn more about the Back to Basics Special

^See information about the Mozo Experts Choice Home loans Awards

How much difference could it make?

You might be thinking, how much difference could switching to a lower rate possibly make - after all, there’s only a difference of around 1%, right? Well, let’s look at the numbers.

The current average variable rate from the big banks is 4.64%*. On a $600,000 home loan over 30 years, that means monthly repayments of $3,090 and $512,481 in total interest over the life of the loan.

On the other hand, the lowest variable rate in the Mozo database at the moment is 3.39%. On the same loan as above, that’s $2,658 each month, and total interest of $356,722 over the life of the loan. That’s an extra $432 in your pocket each month and a total saving of $155,759 - not too shabby!

Top tips when refinancing your home loan

1. Compare rates to see what’s out there.

The first step should be to take a look at the home loan offers in the market at the moment and see if your mortgage measures up.

“There are smaller or online lenders out there that you may never have considered or even heard of, and this might be where you find the best offer. That’s where comparison sites like Mozo come in, making it easy for you to compare a range of options side-by-side,” says Lamont.

2. Think about what features you use

“Refinancing your home loan is the perfect opportunity to reexamine what features you really want and use. Things like an offset account or free extra repayments can help you cut down on interest,” Lamont says.

Think about what’s working for you now and what might help you save even more money, then create a home loan wishlist. Once you know what you want, you can look for an option that fits the bill and has the lowest interest rate attached.

3. Budget for any switching costs

One thing to keep an eye on is any extra costs that might come with switching your home loan, such as a discharge fee from your old lender, or an application fee from your new one.

“In most cases, the savings by switching to a better deal will easily outweigh any fees involved, but it is something to think about, and budget for before you take the plunge,” says Lamont.

*Average and lowest rates calculated for a $600,000, variable rate, owner-occupier loan with principal and interest repayments and an LVR of 80%. All rate are correct at the time of writing, but subject to change.

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