The simple mortgage mistake draining Aussie budgets

By Kelly Emmerton · · 3 min read
Fact Checked
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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.

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Last updated 18 September 2024 Important disclosures and comparison rate warning*

Home loan comparisons on Mozo

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  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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.

  • Fixed Express Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.99 % p.a.
    Fixed 2 years
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Lock in a low 2 year fixed rate with the Mozo award winning Home Lender of the Year. Available for live-in borrowers with just a 10% deposit required. Free extra repayments (up to 20% in fixed period), free redraw and partial offset available. $10 monthly service fee. Aussie support centre. Fast approvals. Up to 6 free offset accounts (T&Cs apply).

  • 3 Year Special Fixed Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    This home loan is available for purchase or refinance, complete with 1, 2 or 3 year fixed rate options. Minimum 10% deposit required.

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Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

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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* 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.

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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.

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