Why now could be the perfect time to refinance your mortgage

If current Australian and world events have left you wondering about the state of your finances, you’re likely not alone. 

Whether you have been affected by the recent bushfires or are feeling the blow of the latest outbreak of COVID-19 (Coronavirus), you may be left thinking you need to hold onto your cash even tighter than you did before. 

So while making small changes like saving on grocery shops or cutting costs on your energy bill may all help in the long run, refinancing your mortgage could be an effective way to give yourself an instant pay rise. 

Since the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to an historic low of 0.50% earlier this month, home loan rates have become more competitive than ever. 

According to the Mozo database, a whopping 52 mortgage lenders passed on the full 0.25% rate cut, leaving the average variable rate sitting at 3.49% (compared to 4.34% this time last year). 

Plus, 82 out of 95 lenders in our database offer fixed or variable home loan rates below 3.00%, with the most competitive rate currently at a low 2.44%. 

How much could I save in monthly repayments by refinancing my mortgage? 

Let’s do the maths. 

Say you currently have a 30 year home loan of $400,000 at last year’s average of 4.34%, you’d currently be paying $1,989 in monthly repayments. 

However, if you were able to refinance that 30 year loan to another loan with a more competitive interest rate, like 2.49% (one of the lowest on our database), your monthly repayments would sit at $1,578 instead. 

That’s a $411 difference, every month! 

RELATED ARTICLE: Home loan variable rates now start with a '2'

So in a nutshell, if you took out a home loan last year or earlier, and your lender hasn’t passed on the recent RBA cuts, chances are you aren’t getting as good of a deal as you could be. 

Want to check some offers out? Take a look at the table below, or give our Switch & Save Calculator a try.

Refinance Mortgages 2020 - last updated 13 August 2022

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

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    3.60% p.a.variable for 24 months and then 4.00% p.a. variable
    3.96% p.a.

    Already includes July RBA rate increase. New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

    Details
  • Unloan Variable

    Owner Occupier, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    3.14% p.a. variable
    3.06% p.a.

    For refinancers only. 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 in as little as 10 minutes.

    Details
  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

    Details
  • Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    3.79% p.a. variable
    3.79% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.

    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, loan amount and term entered. 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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