For home loan borrowers in 2026, the interest rate pain is very, very real. Recent analysis of Australian Bureau of Statistics (ABS) data by KPMG has found that a huge chunk of Aussies’ household income–5.4% in the first quarter of 2026–is being eaten up by home loan interest payments.
That might not sound huge, but given that household incomes haven’t kept up with Australia’s soaring house prices, many of us are feeling it in the hip pocket. If you’re feeling the pressure, don’t despair–there are practical steps you could take.
Six home loan tips that could save you money and stress
1. Keep your repayments high if your lender lowers them
When the Reserve Bank of Australia (RBA) cuts the cash rate–as it’s predicted to by mid-2027–banks and lenders tend to also cut their variable rates, and this could lower your minimum repayments. But you don’t have to accept your new repayment amount. In fact, there are benefits to keeping your repayments at the older, higher level. Doing so could mean you make extra repayments on your home loan with little impact to your budget, letting you slash the time spent repaying your home loan.
2. Change your repayment frequency to pay your loan off faster
Interest on a home loan is calculated daily, so more frequent repayments can reduce the amount you owe more regularly, thereby shrinking how much interest you pay over the life of the loan.
Additionally, in many cases, lenders calculate fortnightly repayments by halving the monthly repayment, while weekly repayments can simply be a quarter of the monthly amount. But most months contain more than four weeks, and therein can lie the key to significant mortgage savings.
“Paying half your monthly repayment every fortnight can knock years off your loan, because you end up making the equivalent of one extra repayment each year–often without it feeling like much on a fortnightly basis,” says Canstar's Lead Research Analyst, Tom Pownall.
3. Use offset accounts and redraw facilities wisely
Offset accounts and redraw facilities are both useful when it comes to putting your extra cash to work in reducing your mortgage interest bill. It’s important to understand the difference, though–especially if you’re a property investor.
“Investors can generally deduct property expenses, including mortgage interest, from their taxable rental income,” says Canstar’s Finance Editor Brooke Cooper, “but the taxman views money removed from redraws and offsets very differently.”
How’s that? Well, the ATO may consider funds you pull out of a redraw facility to be a ‘new’ loan. Unless used for the purpose of producing income (like paying for repairs on your investment property), the interest charged on that portion of the loan mightn’t be tax deductible.
On the other hand, money kept in offset doesn’t affect the balance of your loan. As an investor, this means you can use that money as you see fit, without tax implications.
4. Moving homes? Keep your rate with a security swap
Selling your home and buying a new one? Believe it or not, you don’t have to go through the entire home loan application process again. Some lenders offer what’s known as a security swap (also called home loan portability or a substitution of security). This means you can keep your existing loan and switch the property being used as security, from your current property to your new one. Convenience is part of the appeal–your lender will still need to do an assessment of your credit, but the process won’t be as extensive as if you’d applied for a new loan. You can also save money, as if you’re in the middle of a fixed term on your home loan, a security swap can help you avoid expensive break costs.
5. Scrutinise your home loan regularly to avoid the loyalty tax
Your health, home, and car insurance will give you an annual reminder about your premiums, making it easy to keep track. When it comes to your home loan, though, it’s up to you to keep an eye on things. Over time, banks tend to quietly increase rates for existing customers, while offering shiny new introductory deals to newer ones.
Taking a few minutes once a year to review your interest rate and compare it against others on the market can help ensure you aren’t paying the dreaded home loan loyalty tax. “Borrowers often assume loyalty will be rewarded, but in the mortgage market that’s rarely the case,” Canstar’s Data Insights Director Sally Tindall says.
You could even stand to get some cash back. Some lenders are offering up to $4,000 cashback to tempt you into refinancing, at the time of writing.
One word of caution–if you refinance and extend your loan term back to 30 years, you’ll likely spend longer repaying the debt than you initially planned, paying more interest in the meantime. Consider a shorter term to pay off the remaining balance of your loan more quickly.
6. Threaten to give your lender the flick
If your current home loan’s really not cutting the mustard, it could be time to think about refinancing. But before you leave your current lender, give it a call and let it know you’re thinking about switching. Threatening to leave could be enough for it to offer you a better rate, to try and persuade you to stick around.
If you do this, it’s worth going in armed with as much information as possible. You can use Canstar to compare home loan rates and find out what competitors are offering, so you can show your lender you’re serious about switching.
