Refinancing your home loan? Top refinancing tips and traps to know

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Refinancing your home loan could save you tens of thousands of dollars over the life of the loan, and with interest rates on the rise, it’s little wonder why so many mortgage holders are looking to switch and save. But before you jump headlong into refinancing, there are some crucial expert tips to know for getting a great refinance deal.

According to Mozo banking expert Peter Marshall, it's important to consider smaller lenders as well as the bigger banks when hunting down low home loan rates and fees, and to check whether you're eligible for interest rate discounts if you've built up decent equity in your property.

"It’s always a painful process, but if you can refinance, definitely have a look around, check your current rate, see if you can get something better," explains Marshall.

"Dig around. Search for the little guys who still have decent options available."

One of the biggest mistakes refinancers can make is getting blinded by cash back or honeymoon offers and switching to a mediocre home loan that doesn't reap long term savings. Instead, it's more important to look for low fees, low rates, and useful home loan features like offset accounts or redraws facilities. 

So, if you're keen to switch and save, let's get into the top tips and traps of refinancing. You can use our low-rate home loan comparison table below to see how much you could save by switching.

Mozo's Express Refinancing Guide

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Top refinancing tips:

  1. Look beyond the big banks. Smaller and online lenders often offer some of the sharpest interest rates and lowest fees, not to mention fast online applications and efficient approvals.
  2. Understand your LVR. Many lenders now offer tiered rates depending on your loan to value ratio, so if you’ve built up decent equity in your property, you’ll likely be eligible for a sizeable rate discount.
  3. Rates aren’t everything. Consider what other loan features could help you pay down your mortgage faster, like an offset account to help save on interest, and compare fees to make sure they’re also competitive.

Avoid these refinancing traps:

  1. Chasing cash back and intro offers. Lenders love to woo refinancers with cash back deals, introductory rates, and more, but if the home loan itself is not competitive you'll end up paying more in the long run.
  2. Extending your loan term. Your new lender might offer you a loan term of 25 or 30 years, but if you've already paid off part of your mortgage, extending it out again will cost you more in interest and keep you in debt for longer.
  3. Ignoring the comparison rate. Many borrowers skip over the comparison rate without realising that it's actually a very useful guide to the 'true' cost of the loan. Often given in parentheses after the headline interest rate, the comparison rate includes both fees and interest rates in its calculation.

TOP REFINANCE HOME LOANS - last updated 29 March 2024

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

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

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.40% p.a.

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

    Compare
    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
    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
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.13% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    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

* 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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