When it comes to what we value highly in other people, loyalty is easily among one of the top traits to look for. But unfortunately, that same attribute doesn’t always serve us well when it comes to saving money.
Specifically, I’m talking about our home loans and why, if you have a mortgage, you owe it to yourself and your long-term future to seriously consider moving your mortgage every few years.
The yo-yoing of interest rates over the past few years has managed to make Reserve Bank meetings feel like a nail-biting footy match. Now, after three cuts since February 2025, the RBA announced earlier this month that an increase of 0.25 per cent is headed our way and many economists are speculating that more could be on the horizon.
The good news for most mortgage holders is that the vast majority of Australians are currently ahead on their mortgage repayments because even after the recent rate cuts, many continued to make higher repayments.
This means that for many people, finding the extra money won’t be an issue because they’re already paying the adjusted rate. Or, if there does need to be an adjustment, there’s at least 10 months of buffering there to help ease the pain.
But just because a rise is coming, or because all lenders will be passing those rate rises onto customers, doesn’t mean you have to just accept the fact and update your budget. Actually, that is the last thing you should be doing.
Making it clear that you’re willing to take your business elsewhere gives you the power to bargain and potentially secure some savings.
With most of us taking between 25 and 40 years to pay off our mortgages, the reality is that over those decades, just about every aspect of our lives is likely to change in some way or another.
The idea that you would simply take out a huge loan when you find the right place, and simply set and forget it until the day it’s paid off, is frankly a little crazy. And that is why regularly checking to see if the grass is greener on the other side of the fence is a must.
Here’s an example. Say you borrow the current average Australian home loan amount of $694,000 at 5.8 per cent. Over 30 years, the total amount you will pay if you stayed at that rate forever is $1,465,000.
If you borrow the same amount at 5.4 per cent, it’s $1,403,500. That’s over $65,000 in savings for just 0.4 per cent of a difference.
Given most fixed-rate loans in Australia are set for three to five years, these kinds of variations will happen naturally over the course of your mortgage irrespective of whether you remain loyal or shop around.
But let’s say you find a loan at a competitor institution that’s a full 1.5 per cent lower. Suddenly, you’re paying $1,235,500 and saving $230,000. In my view, that’s a pretty compelling argument for shopping around.
The first thing to know before shopping around is that the RBA is not the only determining factor in what interest rate a bank offers you. The size of your loan, the size of your deposit, your credit history and income can all come into play as well.
For example, you might see a bank spruiking 5.4 per cent loans, but because you only have 15 per cent equity in your home, that rate is not available to you – only a rate of 6 per cent is. You don’t want to waste your time or get your hopes up, so it’s critical to read the fine print from the outset.
From there, the next step is to contact your current lender and ask for a better deal. While its true loyalty isn’t always rewarded, that’s not a blanket rule. Making it clear that you’re willing to take your business elsewhere gives you the power to bargain and potentially secure some savings. Remember, those who don’t ask don’t get. So go ask!
Once you have an answer from your current lender, it’s time to start comparing your options. This includes looking into what rates are on offer and if you’re eligible, and comparing any application fees, annual loan fees, and finding out if there are any fees for switching or terminating loans.
If you want to pay your mortgage off ahead of schedule, it’s also worth finding out if there are fees for additional repayments. For example, some banks will charge a fee if you make more than $10,000 of additional repayments in a year.
Comparison websites can help you find out the answer to these questions, but generally, these sites make money through affiliate and promoted links, meaning they don’t always show you every option available.
The federal government’s Money Smart website has a great general mortgage calculator and a mortgage switching calculator that’s free to use as well.
Another alternative is to use a mortgage broker, who does the comparison legwork for you and is paid a commission by a bank upon settlement of the loan – meaning there’s no out-of-pocket cost for you.
As someone who runs a mortgage brokerage, I obviously think it’s a pretty good service, but you absolutely do not need to use a mortgage broker – a spreadsheet and some patience will serve you perfectly well if that’s your preferred way to go.
Once you’ve done your research and decided if you do want to move, the final and most important step is to be crystal clear on the length of the new loan term. Let’s say you’re seven years into what was originally a 30-year mortgage and want to stay on that schedule.
Make sure you stay firm on that because if you don’t, you could suddenly find yourself moving onto a new 30-year loan again. You might not be back at square one again because the loan is a smaller amount than when you first took it out, but you’ll be adding seven extra years of interest repayments to your life.
At the end of the day, our mortgages are a culmination of so many years, so much money and so much effort. We owe it to ourselves and our futures to find the best deal – even if it does require a bit of effort.
Victoria Devine is an award-winning retired financial adviser, a bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. She is also founder and director of Zella Money.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.
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Victoria Devine is an award-winning retired financial adviser, best-selling author, and host of Australia’s number one finance podcast, She’s on the Money. Victoria is also the founder and managing director of Zella Money.
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