Home Loan rate cut calculator

Home loan rate cut calculator

What is your repayment type?

Principal and interest

Interest only

What is your remaining loan amount?

$

What is your current interest rate?

%

How much is your rate going down by?

%

What is your loan term?

With a new interest rate of , your monthly repayments will decrease by .

You could save a month based on Finder's lowest refinance interest rate of

Compare your options in under a minute.

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How to use the rate cut calculator

Enter the following details into the calculator (or estimate them if you don't know):

1. Select your repayment type. Most borrowers have principal-and-interest repayments. This means you're paying back the loan plus interest. If you're not sure, just select that option for now. If you have an interest-only loan you're just paying the interest charge every month but not actually repaying the loan yet.
2. Enter your remaining loan amount. Check your latest home loan statement and see how much you have left to repay on your home loan.
3. Enter your current interest rate. Again, your home loan statement should have your current interest rate.
4. Enter your new rate. This is your current interest rate minus however much your lender is (or is expected to be) decreasing rates by (note: lenders don't always pass on the full rate cut, so check what your lender is doing). If your current rate is 6.00% and your lender is cutting rates by 25 basis points, then your new rate is 5.75%.
5. Enter your remaining loan term. Most home loans have a 30-year term. Estimate how long you have left on your loan, to the nearest year.

What impact does a rate cut have on my loan?

Even a small decrease in interest rates can have a big impact on your monthly repayments. If you are able to though, keeping your monthly repayments at the same amount as before the rate cut will mean you pay off your home loan much faster.

The impact of a 0.25% cut on a home loan

The Reserve Bank of Australia (RBA) has been cutting interest rates this year. Cuts to the interest rate so far have been 0.25% each time.

Let's take a look at how much one cut could impact home loan repayments:

Now let's try that again with a 0.25% lower rate. Every other loan detail is the same.

Here we see that one rate cut of 25 basis points would save this borrower $96 a month. Over a year, that works out to $1,152 less. It saves you $34,512 in interest over the life of the loan. And that's just one rate cut.

Frequently asked questions about calculating a rate change

• My interest rate hasn't been cut: What are my options?

  Lenders don't always pass on rate cuts and if they do it's not always in full. That's particularly the case if the market is expecting multiple cuts in a short period of time: like this year.

  This doesn't mean you're stuck. There are always better deals on the market.

  Even though your lender may not have passed on the rate cut, other lenders have. And many of those will have very attractive offers for new customers.

  This gives you 2 options:

  1. Call your lender and ask for a better deal. This is a pretty simple trick and often works great if you see that your lender has a lower interest rate for new borrowers on its website. Just make sure your loan type is the same as the new one, so it's a fair comparison. Call your lender and ask for a better deal. If your lender won't budge, tell it you're going to refinance.
  2. Refinance your home loan. Switching mortgages is easier than you think. Start by checking out interest rates and then start the refinancing process by applying for the new loan.

• How do you calculate a reduction in interest rate?

  To work out how much a rate cut will save you, you need your loan amount, remaining loan term and the old and new interest rates.

  Then you can use the calculator above to get a simple estimate. The calculator simply tells you the difference in monthly repayments between the old and new rate.

  This doesn't include the cost of any ongoing loan fees you may have, but it's a simple way to calculate the impact of rate cuts.

• Will interest rates rise again

  At the moment, Australia is in a rate cutting cycle. But because interest rate movements are a cycle, one day we will see rates rise again. It's not expected any time soon, but because interest rate movements are based on both domestic and global economic circumstances, it can be hard to judge when it might happen.

  For now, economists expect the rate will continue cutting slowly in 2025 and even possibly in 2026.

To make sure you get accurate and helpful information, this guide has been edited by Jason Loewenthal as part of our fact-checking process.

Written by

Richard Whitten

Senior Money Editor

Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 688 Finder guides across topics including:

• Home loans
• Credit cards
• Personal finance
• Money-saving tips