Home loan resources

Give yourself an instant pay rise by refinancing your home loan 

With the Reserve Bank of Australia making three cuts to the official cash rate in 2019, and another potentially around the corner, home loans rates have been nothing short of tumbling. So if you haven’t taken a look at your home loan rate in a while, now might be as good a time as ever to take things into your own hands now and make payday come early by switching to a better home loan deal. 

Refinancing to a home loan with a lower interest rate attached will not only lower the interest you pay, thus freeing up extra cash, but will also reduce your home loan repayments making budgeting in the lead up to Christmas (and the Christmases every year after) a much easier feat.

Home Loan Comparison Table

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loans.com.au
Smart Home Loan

Owner Occupier, Principal & Interest

2.88% p.a.

2.90% p.a.

Go to site

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UBank
UHomeLoan - Discount Offer

Owner Occupier, Principal & Interest

2.84% p.a.

2.84% p.a.

Go to site

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Athena
Variable Home Loan

Owner Occupier, Principal & Interest

2.84% p.a.

2.80% p.a.

Go to site

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Heritage Bank
Discount Variable Home Loan

Owner Occupier, LVR<80%

3.07% p.a.

3.12% p.a.

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IMB Bank
Budget Home Loan

LVR 70-90%, Owner Occupier, Principal & Interest

3.13% p.a.

3.19% p.a.

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*The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a home loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years, and applies only to this example. Different amounts and terms will result in different comparison rates. Full comparison rate schedules are available from lenders. Costs such as redraw fees or early repayment fees, and savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Read on to see how much you could potentially pocket by making the home loan switch:

Are you an owner occupier?

If you answered “yes” the good news is lenders are vying for your business, with a number of home loan rates on offer below the 4.00% mark. 

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 4.30%, on a $500,000 home loan with 20 years left. According to the Mozo home loan repayments calculator, your current monthly repayments would be $3,110 and the interest you’d pay over the remainder of the loan would be $246,286.

But if you are savvy and switch to a low rate home loan offered exclusively to owner occupiers like UBank’s UHomeLoan - Exclusive Offer* with a 2.84% variable interest rate (2.84* comparison rate*), your repayments would drop down to $2,186 each month and the interest you’d pay over the remainder of the loan would be $124,757.

Monthly pay rise = $924
Pay rise over 20 years = $121,529

Are you an investor?

While the best deals are currently reserved for owner occupier borrowers, if you’re an investor that has felt the bite of your current home loan rate increasing, huge savings could be made by switching. Just check out the below scenario:

To keep things consistent 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 4.60%,  that means your monthly repayments would currently be $3,190 and the interest you’d pay over the remainder of the loan would be $265,672.

But if you made the switch to online lender Click Loan’s The Online Home Loan, which is available to investors and offers a 3.98% variable interest rate (3.98% comparison rate*), your repayments would drop down to $2,420 each month and the interest you’d pay over the remainder of the loan would be $180,730.

Monthly pay rise = $770
Pay rise over 20 years = $84,942

Pay day come early

As you can see, the potential money up for grabs by making the home loan switch is big, sitting at $121,529 for owner occupiers and $84,942 for investors.

It just goes to show, even though providers are targeting owner occupiers with the most competitive deals, because the average big four rate at the moment is significantly higher for investors than owner occupiers the potential savings for an investor refinancing from a major is greater too.

And when you consider switching home loans only takes a few short hours, we’d say that is time well spent and a quick way of giving yourself an instant pay rise.

Of course, that’s just two scenarios of the potential savings that could be made. Punch in your details into our home loan comparison calculator to see how much you could save by making the switch. 

*Rates correct  17 January 2020 

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