Give yourself an instant pay rise by refinancing your home loan 

By Evlin DuBose ·
Fact Checked
Advertiser disclosure
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With the Reserve Bank of Australia hiking interest rates for the first time in 11 years, the cost of financing a home loan has surged. So if you haven't taken a look at your mortgage in a hot minute, now's as good as time as any to take things into your own hands and make payday come early by switching to a better home loan deal.

Refinancing to a home loan with a lower interest rate will not only lower the interest you pay, thus freeing up extra cash, but will also reduce your home loan repayments, making budgeting for the rising cost of living a much easier feat.

But how much could you potentially save?

Loan details

Rate change

Repayment change if rates go up

Are you an owner occupier?

Good news! Lenders are vying for your business, with many variable rate offers still drifting below the 3.50% p.a. mark.

RELATED: Home loan rate check: How do ANZ, CBA, NAB and Westpac compare?

To give you an idea of how much switching to a lower rate deal could save you, here’s a quick comparison:

Say your current rate sits at 5.30%, on a $500,000 home loan with 20 years left. According to the Mozo home loan repayments calculator, your current monthly repayments would be $3,383 and the interest you’d pay over the remainder of the loan would be $311,969.

But if you are savvy and switch to a low rate home loan offered exclusively to owner occupiers  with, for example, a 3.23% variable interest rate (the current average in Mozo’s database), your repayments would drop down to $2,831 each month and the interest you’d pay over the remainder of the loan would be $179,418.

  • Monthly pay rise = $552
  • Pay rise over 20 years = $132,551

Are you an investor?

While it’s true investors often get saddled with higher interest rates than owner-occupiers, it doesn’t mean there aren’t plenty of ways to cut the costs of your loan.

RELATED: Rental expenses investors can claim on their taxes

For the sake of consistency, let’s use the same example as above of a $500,000 home loan paid back over 20 years, making both principal and interest repayments. 

Say your current home loan rate is 5.65%. This means your monthly repayments would currently be $3,482 and the interest you’d pay over the remainder of the loan would be $335,664.

But if you made the switch to, for example, a loan with a 3.65% variable interest rate (the average in Mozo’s database), your monthly repayments would drop down to $2,938 and the interest you’d pay over the remainder of the loan would be $205,237.

  • Monthly pay rise = $544
  • Pay rise over 20 years = $130,427

Pay day come early

As you can see, the potential money up for grabs by making the home loan switch is big, ranging from $132,000 for owner occupiers to $130,000 for investors.

Considering savings accounts and term deposits are on the rise too, this could be considerable money back in your pocket for a future rainy day. Vive le refinance!

Punch in your details into our home loan comparison calculator to see how much you could save by making the switch.

Compare refinance home loans - last updated 2 July 2022

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

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    2.64% p.a. variable
    2.65% p.a.

    Low variable rate. Ideal for buyers or investors. No annual fees to pay. Unlimited additional repayments. Free redraw facility available. Fast digital application. 40% deposit required.

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    Details
  • Smart Booster Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    2.60% p.a.variable for 24 months and then 3.00% p.a. variable
    2.96% p.a.

    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.

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    Details
  • Unloan Variable

    Owner Occupier, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    2.64% p.a. variable
    2.56% 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.

    Go to site
    Details
  • Variable Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    2.64% p.a. variable
    2.66% p.a.

    Purchase and Refinance. Yard’s low-rate variable special home loan is packed with all features – unlimited additional repayments, free redraw, optional 100% offset account. Enjoy a simple online application.

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    Details
  • Mozo Expert Choice Badge
    Variable Rate Home Loan

    Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    2.59% p.a. variable
    2.49% p.a.

    $5000 refinance cashback. Owner-occupier refinancers only living in NSW/VIC/SA metro and inner regional areas. Receive up to an additional 0.15% off your rate as you pay off the loan. Receive bonus payments up to $2,500. T&Cs apply. Mozo Experts Choice Award winner for 2022^.

    Go to site
    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.

^See information about the Mozo Experts Choice Home Loan Awards

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