The average Australian is literally throwing away $58,000 by not refinancing their home loan

Posted: 17 August 2018 1:15 pm
News

Man realising how much money he's wasting.

By sticking with higher interest rates Australians are throwing piles of cash down the drain.

When did you last check the interest rate on your home loan? Go on, look at your latest bank statement. It's probably higher than you think. We're not exaggerating: switching home loans is easy and by failing to do so you're literally throwing up to $58,000 away.

Really? That much?

Yep. Let's say you've borrowed $400,100 (that's the Australian average, but you may have borrowed a lot more). Now say your interest rate has crept up to 4.30% (don't laugh, check your bank statement!).

If you've taken out a standard, 30-year mortgage with principal and interest repayments at that rate, you'd be paying $1,979.98 a month in repayments. By the end of the loan that's $712,793.03.

Enormous. But what if you switched to a competitive mortgage with a 3.59% interest rate? You'd be paying $1,816.79 a month. That's $654,043.88 for the life of the loan.

That's a saving of $58,749 dollars (and 15 cents).

Switch to a 3.59% rate right now

What does $58,000 really look like?

Human brains aren't great at processing large numbers, so let's break down what your refinance savings look like.

$58,000 is…

Cart full of groceries.

  • 36 weeks of full-time work. The average full-time Australian salary is $82,482 a year, according to the ABS. By not refinancing you're wasting more than 8 months of full-time work. Switch your loan (and ask for a pay rise while you're at it).
  • Over 3 years of groceries (alcohol included). According to MoneySmart.gov.au, a young Aussie family of four spends $336 a week on food and drink. Get your mortgage sorted and start buying the expensive toilet paper.
  • Enough to buy this house. Seriously. Drop $58,000 down and you could buy this 3 bedroom bargain in Meandarra, Queensland without borrowing a dollar more. And it's on a large corner block.
  • 58 return flights from Sydney to Los Angeles. Your mileage may vary, but Air New Zealand is offering return flights from Sydney to LA right now for around $1,000 per person. That is 2,320 hours in the air, though.

LA skyline with smog.

  • 91 metres. Divide $58,000 into $100 notes. That's 580 $100 notes, each with a length of 158 millimetres. If you laid them out neatly end to end, you'd have 91 metres of straight cash.
  • A year's tuition and board at the King's School, Parramatta. You'd be around $1,000 short for a Year 11 or 12 student, though, and your kid might get better results at the local public school anyway.
  • A 2018 BMW X2. Ah, now that's a shiny all-wheel drive motivation to refinance.

OK, I get it! But how do I refinance my home loan?

Switching is really quite easy. You need to compare home loans and find one with a lower interest rate and the features and repayment type you need.

Then you apply for approval just like any other mortgage. You'll need identification (driver's licence, passport) and financial documents (bank statements, pay slips) and your lender will value your property again.

Once approved, there's nothing else you need to do. Your new lender will talk to your old lender and handle the actual switching for you. It's a few hours of work to save up to $58,000. It could be the fastest money you've ever made.

Learn more about refinancing

Compare rates and refinance right now

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Credit services for Aussie Select, Aussie Activate and Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Activate products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Group Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper. Credit services for Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 (“Aussie”) and its appointed credit representatives. Aussie is a trade mark of AHL Investments Pty Ltd ABN 27 105 265 861. Credit and any applicable offset accounts for Aussie Elevate are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL / Australian Credit Licence 237879.

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Data indicated here is updated regularly
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% p.a.
Offset account
Split account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Maximum Insured LVR Amount Saved Short Description
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
2.64%
2.66%
$0
$0 p.a.
80%
Up to $4,000 refinance cashback.
A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get up $4,000 cashback for their first application (Other terms, conditions and exclusions apply).
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
2.49%
2.49%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Athena Celebrate Home Loan - 60% LVR  Owner Occupier, P&I
2.34%
2.34%
$0
$0 p.a.
60%
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)
2.68%
2.69%
$0
$0 p.a.
80%
$2,000 to $3,000 refinance cashback.
Get a competitive variable interest rate with no application fee or ongoing fees. Refinance to an eligible Suncorp loan and get a cashback of $2,000 or $3,000, depending on your loan amount. Other conditions apply.
HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)
2.59%
2.60%
$0
$0 p.a.
80%
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.
homeloans.com.au Low Rate Home Loan with Offset - LVR Under 60% (Owner Occupier, P&I)
2.44%
2.46%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
Tic:Toc Live in 10% deposit Variable Rate - Principal & Interest (Offset Available)
2.39%
2.40%
$0
$0 p.a.
90%
Get a very low interest rate and pay no application, settlement or valuation fees. Apply online for full approval in real time and add a 100% offset account for $10 a month.
Yard Variable Home Loan - LVR 80% Special (Owner Occupier, P&I)
2.39%
2.42%
$0
$0 p.a.
80%
A very low variable rate loan for home buyers with an optional offset account ($10 monthly fee). 20% deposit required.
Virgin Money Reward Me Variable Home Loan - LVR ≤ 60% ($750k+ Owner Occupier, P&I)
2.55%
2.72%
$300
$10 monthly ($120 p.a.)
60%
$2,500 refinance cashback
Buy your home and lock in a low rate for the first two years. Get a $2,500 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 28 August and settle by 30 October 2020.
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