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Don't have a mortgage? You can head straight to Module 6.
Why you need a better home loan
As part of your 5-minute budget, you already know how much you pay on your mortgage each month.
Let's compare that to the average spend across the country. Taking the average home loan value ($608,448) and the average variable interest rate in Finder's database (7.26%), the typical Australian is paying around $4,155 a month.
If you're paying less than that, fantastic! But, it doesn't mean you can't be on a better deal.
And remember, everyone's mortgage size, property and circumstances are different, so it may not reflect a good benchmark for you at all.
Whatever you're paying, it hurts to be complacent.
According to Finder's Consumer Sentiment Tracker, 35% of Australians struggled to pay their mortgage this year. It's no surprise given interest rates have increased 4.25 percentage points since 2022.
Even if you think you were on the lowest interest rate 2 years ago, banks will usually pass on full rate hikes to existing borrowers. But there are always deals and offers for new customers.
In fact, the average borrower could save around $530 a month or $6,360* a year, by refinancing to the lowest rate available on Finder.
If you have an offset account connected to your home loan, you could potentially save even more. Instead of using a savings account where you will pay tax on the income you earn from interest, pooling your savings into an offset account offsets the loan balance so you pay less interest. The best part is it's not taxed.
Make sure you check if there are any fees for offset accounts as the fee could outweigh the potential savings if you don't have much in the account.
How to get a better home loan
Now that we've explained why you need a better home loan deal, it's time to look at where to start if you want in on those savings.
The first thing to do is take stock of your existing home loan information. Not just the interest rate, but all the features that come along with the loan. This way, you know what's important for you to have on a future loan.
Then, take a look at the market. See what other interest rates are on offer, considering the equity you have in your home and those features you've decided you want to have.
Let's take a look at an offer on the market right now.
Tiimely's Own Variable Home Loan has had consistently low interest rates for the past year – in fact, the online lender just took out 3 awards as part of the Finder Home Loan Awards for 2024 and was highly commended in 5 other categories.
Its starting interest rate of 5.94% is 1.32 percentage points lower than the average rate on the market right now.
It also offers a fast application process.
There are no application fees or ongoing fees, which means you're more likely to reach your savings goals.
However, there are fees for add-on features. For example, Tiimely charges a monthly $10 fee if you want to add an offset account, which for many people is one of the most crucial features attached to their home loan.
Another option is to negotiate with your existing lender. Talk to your lender and see if you can negotiate a better rate: we've even prepared a script you can use. It's a really important place to start. And it means you wouldn't need to fork out any extra costs associated with refinancing (more on that below).
What should I look out for with a mortgage?
Here's the biggest mistake refinancers make: switching to a lower interest rate and still paying more money.
You may also find your new loan comes with ongoing fees or additional charges for certain features. These could bring up your monthly repayments in a way that wipes out any savings.
It's really important to take all those things into consideration when you're looking at a new home loan so you don't get caught out.
You also want to be sure you're still getting all the things you want from a home loan such as: split accounts, offset accounts, redraw, extra repayments, branch access and packaged with a credit card.
Some of these features not only make your life and mortgage management easier, but they can save you money in the long run.
*Based on the average home loan of $608,448, the average variable interest rate in Finder's database of 7.26%, compared to the lowest variable rate on Finder of 5.94%, paying principal and interest.
Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing for business publications in the mortgage and finance industry, including three years as editor of Mortgage Professional Australia. She regularly appears as a money expert on programs like Sunrise and Today, as well as across radio and newspapers. She also holds ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products.
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