Worried your home loan rate isn’t competitive? Maybe it's time to switch
Yes, the RBA has increased the cash rate by 0.25% and banks are already responding by passing on the rate hike to variable home loans.
So now might be the best time to look at your current mortgage interest rate to double-check that you’re getting a competitive rate. But before you think about switching there are a few things to consider:
- The amount of equity you have on your home
- Extra fees and costs that may come with refinancing home loans
- Ensuring a switch gets you a better deal.
Below we’ve created a scenario where a couple is comparing their current home loan with a major bank to a smaller lender.
Major bank vs smaller lender
Jacob and Thomas bought a house in a suburb near a major city for $800,000. After paying with a 20% deposit the couple got a variable home loan from CommBank for 4.80% p.a. for 25 years.
CommBank
| Cost of the house (minus deposit) | $640,000 |
| Variable interest rate | 4.80% p.a. |
| Monthly repayment | $3,677 |
| Total interest expected to pay | $460,154 |
*This total does not include council fees, bills or home insurance costs.
Jacob and Thomas’ monthly mortgage repayment is $3,677. Which is about $44,124 annually.
After a while, the couple felt the rate they had wasn’t competitive enough, especially when more rate hikes loom. So they decided to see how much they could be saving by switching to an online lender instead.
If they were to switch to a smaller lender like Athena then they might get a variable interest rate of 2.24% p.a. which is 255 basis points (or 2.55%) lower than CommBank’s rate.
Athena
| Cost of the house (minus deposit) | $640,000 |
| Variable interest rate | 2.24% p.a. |
| Monthly repayment | $2,788* |
| Total interest expected to pay | $196,420 |
*This total does not include council fees, bills or home insurance costs.
By switching to Athena, Jacob and Thomas were able to slash $889 from their monthly repayments and pay about $33,456 annually. Not only that, the total interest payable is reduced by $263,734, which means that they can pay off their home faster.
The average variable interest rate is 3.02%, which means that if the couple secures that 2.24% rate they are 78 basis points below the average.
But what happens if they can’t get the low 2.24% rate? What if they get something closer to the average?
Average home loan interest rate
| Cost of the house (minus deposit) | $640,000 |
| Variable interest rate | 3.02% p.a. |
| Monthly repayment | $3,042* |
| Total interest expected to pay | $272,484 |
*This total does not include council fees, bills or home insurance costs.
By finding a rate closer to the average, Jacob and Thomas could potentially save $635 on their monthly repayments. Paying about $36,504 annually compared to the $44,124 annually with their current rate with CommBank. Even the average rate provides them with a better outcome!
After some thought, the couple decided to make the switch and put the money saved into a term deposit with a high interest rate.
Loan details
Repayment change if rates go up
Should I switch my home loan?
One of the key features of switching your loan from one lender to another is to find a better deal to save money in the long run. That’s why thousands of Australians refinance their home loans.
An Australian Bureau of Statistics report found that Australians are financing at about $14 billion a month!
To get started you should research, research, research!
You want to make sure you’re getting the best deal possible with a home loan that suits all your needs. It’s also important to see what the requirements of each lender are. Some require you to have a certain amount of equity before you can switch or get lower rates. The more equity you have, the higher chance you have of nabbing a cheaper mortgage.
If you’re still not sure about how to refinance your home loan don’t worry, we have plenty of guides available to help you. Alternatively, check out our home loan rate change calculator to see how switching your interest rate may decrease your monthly repayments. If you’re like Jacob and Thomas and looking to make a switch to a more competitive home loan interest rate you can start comparing below or go to our comparison table.
Home loan comparisons on Mozo - last updated 26 April 2024
-
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Owner Occupier, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.99% p.a. variable5.90% p.a.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.
CompareCompareUnloan Variable
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.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Mozo experts choice awards won:
- Exceptional Value Home Lender - 2024
Express Home Loan
Owner Occupier, Principal & Interest, LVR <90%
interest rate
comparison rate
Initial monthly repayment6.01% p.a. variable6.14% 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.
CompareCompareExpress Home Loan
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.
- interest rate
- 6.01% p.a. variable
- comparison rate
- 6.14% p.a.
- Ongoing fees
- $10.00 monthly
- Discharge Fee
- $350.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $5,000
- maximum borrowing amount
- $3,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Bendigo Bank Express Home Loan
-
Basic Home Loan
Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment6.14% p.a. variable6.16% p.a.Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.
CompareCompareBasic Home Loan
Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Basic Home Loan
-
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Investment, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.29% p.a. variable6.20% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Fixed Rate
Owner Occupier, Principal & Interest, <80% LVR
interest rate
comparison rate
Initial monthly repayment6.54% p.a.
fixed 2 years7.10% p.a.Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.
CompareCompareFixed Rate
Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.
- interest rate
- 6.59% p.a.
fixed 3 years
- comparison rate
- 7.06% p.a.
- Ongoing fees
- $0.00
- Discharge Fee
- $160.00
- Extra repayments
- yes - free up to to lesser of 5% of original fixed loan amount, or $5,000 each year
- Redraw facility
- no
- Offset account
- Optional - $10 per month - 1 year fixed term only
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $20,000
- maximum borrowing amount
- -
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- $3,000 cashback for eligible First Home Buyers, $2,000 cashback when you refinance loans of $250k+, apply from 1 Dec 2022, settle within 180 days.
Read our Mozo Review to learn more about the ANZ Fixed Rate
Interested in an ANZ home loan? Lendi specialists can help you refinance your home loan.
You can this discuss this option and compare against 25+ lenders with our trusted partner Lendi.
Answer a few questions online about your current loan and Lendi will connect you with one of their experienced home loan specialists, who can guide you every step of the way.
Your selected home loans
Your selected home loans
Your selected home loans
Your selected home loans
Your selected home loans
* 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
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.