If you’ve had your home loan for more than 3 years, new research suggests that you could be paying too much.

In the wake of the Reserve Bank of Australia's recent decision to reduce the cash rate to 1.25% the mortgage market has never been more competitive, so it makes good financial sense to review your home loan regularly to make sure you're not paying more interest than you should be. However, saving money on a lower interest rate is just one of the benefits to refinancing. By reviewing your home loan you may also be able to:

  • Gain flexible features that are not available with your current loan
  • Access discounts on credit card and transaction banking fees, insurance and other products
  • Achieve your financial goals

So if you're thinking it's time to give your home loan a health check, here are some things you should consider.


How much will I save?

When it comes to refinancing it's important to weigh up the potential savings you could make by switching loans, against the costs.

Use the comparison rate

When comparing one rate against another make sure you are using the comparison rate - not the variable rate. If you compare loans based on the variable interest rate, you're not taking into account the fees and charges the loan may carry. Instead, look at the comparison rate as a tool to help you identify the true cost of the loan.

Use the Home Loan Key Fact Sheet

To find out how much refinancing your loan will save you, you’ll need to know the total amount of interest you’ll pay over the life of the loan. You can find this information on the Home Loan Key Fact Sheet, which is available on our website.

Simply subtract the amount you’ve borrowed from the ‘Total Amount Repaid’ and you’ll have the total interest you’ll pay on that home loan. Once you have this information you can weigh it up against the refinancing costs – in many cases the savings can be significant!

TIP: If you can’t find a Home Loan Key Fact Sheet on a financial institution’s website you should ask them to send you one, as they are required to provide this information.


Understand what costs are involved

While refinancing is a straightforward process, there are some costs you'll need to consider.

Break fees

If you’ve got a fixed rate home loan, there are likely going to be fees associated to break your contract early. You should consider these and weigh them against the long-term savings of refinancing.

Valuation fees

Refinancing means that you’ll most likely need to have your property professionally valued again. Valuation fees generally cost $300-600 depending on where you live.

Establishment and ongoing fees

Your new loan may have an establishment fee and could have ongoing fees, so make sure you take these into account.


What to look out for

Interest rates are not the only thing to consider when you are looking to refinance. Each loan will offer a combination of different features, so make sure the one you choose has the features that are important to you. Some questions to ask when evaluating a loan include:

Does the home loan offer an offset facility?

An offset is a savings account linked to your home loan – so the more money that you put into this account, the less interest you’ll pay on your mortgage.

For example: if you have a home loan of $450,000 and you have $20,000 in your offset account, you’ll only be paying interest on $430,000.

Can you package your home loan?

Home loan packages, like MOVE Bank’s myHome and myWealth home loans, can provide you with substantial discounts on other banking and insurance products.

How flexible is your home loan?

Does your current loan allow you to make extra repayments? If you are in advance on your mortgage, are you able to redraw these funds easily? Are you able to split your loan and fix a portion of it for a period of time? Depending on your financial needs you may want one or all of these features so it pays to do your homework
and find out before you switch!

Achieve your financial goals

Our needs change as we move through different stages in life, so you may find that a different loan can help you achieve your financial goals sooner.

For example:

  • If you’ve been paying off your mortgage consistently over the past few years, you might be able to use the equity in your existing property to renovate, secure an investment property or even purchase shares.
  • If you have multiple smaller debts (such as car loans or personal loans) it may be worth refinancing them with your home loan to streamline repayments and potentially save on interest.

A MOVE Bank home loan specialist can help you explore your options and provide expert advice on a range of possible solutions.