Compare top home loan refinance rate offers

SEAN CALLERY
Deputy Editor · 16 July 2021
Refinancing your home loan has the potential to save you money and help you pay off your home sooner, but only if you pick a loan that’s more competitive than your current one. That means shopping around for a lower rate.

Canstar rounds up some of the lowest fixed and variable rate refinance home loan rates currently on its database and answers some of the questions you may have if you’re thinking about refinancing.

In this article:

Some of the top refinance home loan rates on Canstar’s database


Compare Variable Rate Home Loans with Canstar

The comparison tables below display some our referral partners’ variable rate home loan products on Canstar’s database for refinancing owner-occupiers in NSW making principal and interest repayments on a loan of $350,000 with an 80% LVR. The results are sorted by comparison rate (lowest to highest), then by company name (alphabetically). Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loans comparison selector to view a wider range of home loan products. Canstar may earn a fee for referrals.



Compare Fixed Rate Home Loans with Canstar

The comparison tables below display some our referral partners’ fixed rate home loan products on Canstar’s database for refinancing owner-occupiers in NSW making principal and interest repayments on a loan of $350,000 with an 80% LVR. The results are sorted by comparison rate (lowest to highest), then by company name (alphabetically). Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loans comparison selector to view a wider range of home loan products. Canstar may earn a fee for referrals.


How much could you save by refinancing your home loan to a lower rate?

If you choose the right product, refinancing your home loan could save you a significant amount of money in interest over the life of the loan. This is because there can be a massive difference between the rates different lenders are offering, and some offer particularly attractive rates to new customers looking to refinance to them.

To illustrate this, the average standard variable owner-occupier home loan interest rate on Canstar’s database is 3.27% (as at 12 July 2021), while the lowest rate on offer is 1.89% (comparison rate 1.90%). These rates are based on a loan amount of $500,000 and a borrower with an LVR of 80%, excluding first home buyer-only loans and introductory offers.

Based on these figures, a hypothetical borrower paying principal and interest on a $500,000 loan at an interest rate of 3.27% could save $354 per month by switching to a loan with a rate of 1.89% If the borrower refinanced five years into a 30-year term and the interest rate stayed at 1.89% over the remaining 25 years, they would pay $109,781 less interest in total.

This calculation does not factor in fees or costs associated with switching, which brings us neatly on to…

Does refinancing cost money?

While it may save you money over the long term, there can be some upfront refinancing costs to bear in mind. Some common fees you may need to pay are:

Discharge/break fee: This is sometimes charged by your old lender to release you from the loan contract. If you switch from a fixed-term loan, you may also incur a break fee if you’re ending the loan agreement before the end of the fixed term.
Application fee: You may need to pay a fee to the new lender when you apply for its home loan product.
Ongoing fees: For example, a monthly account-keeping fee on a linked offset account.

Another way that a lower rate home loan could end up costing you is if you refinance to a higher loan amount or extend the term of your loan.

Using Canstar’s mortgage repayment calculator could help you work out the impact of borrowing more and over a longer term.

Why might you refinance your home loan?

Refinancing your home loan generally means switching to a new product or provider.

There are a number of reasons why you might choose to do this:

Saving money with a lower rate: By switching to a loan with a lower interest rate and/or lower fees, your regular repayments will generally be lower. It’s important to consider fees too. Shopping for loans based on the comparison rate can help you get an idea of the overall cost of the loans you’re considering.
Pay off your loan sooner: A cheaper interest rate could mean being able to pay off your loan sooner than the standard term. To do this, you would generally need to keep your regular repayment amount the same as it was on your old loan.
Access better features: You could also choose to switch to get access to features that your current loan doesn’t offer, such as an offset account or redraw facility.
Move to a new lender: You may simply prefer to move your business to a new provider – for example, if your current one is not offering you the service level you would like.
Your situation has changed: A change to your circumstances could mean that switching to a new product makes sense. For example, you might choose to switch to a fixed rate product if certainty in your repayment amounts is particularly appealing right now.