How to boost your savings by refinancing your home

Stories

While the majority of Australians don’t know what their home loan rate is, savvy home owners are freeing up cash by refinancing to a better rate – saving thousands of dollars a year.


Raising a family often means shifting priorities. Juggling school or childcare runs with work commitments, while paying for a never-ending range of expenses.

But what if there was a simple way to free up some significant monthly savings? Enough for a much-needed family holiday, a bathroom makeover, or even that university education fund you keep talking about?

Your home loan could be the answer.


The cost of complacency on your home loan repayments

On average, Australians spend between 21% and 39% of their monthly income on their home loan. It’s likely to be your biggest single expense – and it’s one you have some control over.

“In this competitive interest rate environment, you need to be aware of what your current rate is, and what’s available” explains Jason Jessup, Associate Director at Macquarie’s Banking and Financial Services Group.

Yet Pocketbook’s analysis of 200,000 users found as many as 90% of Australians don’t know what their home loan rate is – and some are paying as much as 1.75 percentage points more than the best rate on offer.

Let’s put that into perspective.

If you have a $500,000 home loan at a rate of 5.75%, and you’re paying 1.75 percentage points more than the best rate available to you – you’re paying more than $530 extra a month. That could soon add up to a family holiday, the first year of school fees – or even a down payment on an investment property.

“One of my clients created offset accounts in the names of each child. They split the monthly savings between those accounts, saving for the kids’ future education while reducing the interest payable on their home loan – and eventually paying the loan off sooner,” says Lucinda Schettino, Sales Engagement Manager at Macquarie’s Banking and Financial Services Group.


How to supercharge your savings

Refinancing can be a relatively straightforward process, and, after refinancing, savvy homeowners can choose to keep paying the same, higher, monthly repayment required under their previous home loan. Paying that little bit extra a month, can shave years off your loan.

“That extra payment is always available to you, in your offset account,” explains Jessup. “So if you need it later, you can spend it – but in the meantime, it’s saving you more on your interest repayments.”

If you keep adding $530 extra a month to your offset on that $500,000 loan, you could pay it off eight years and eight months early – saving more than $116,000 in interest in the process.

“Our loan terms are 30 years, so we often see clients work out how much their loan repayments would be over a shorter period – say 20 years – and increase their monthly repayments to that amount,” comments Schettino.


Make even more of your money

Most people refinance because they want a lower interest rate (and lower monthly repayments). But there are other benefits to weigh up beyond a cheaper deal.

For those Macquarie customers who switch their everyday banking along with their home loan, it’s the digital banking tools that make the difference.

That includes:

  • Intuitive budgeting tools, to help you track your spending
  • Apple Pay and Google Pay, so you don’t need to carry a wallet
  • The reassurance of push notifications on your mobile when you make a payment – so you’re on top of security
  • Redeeming credit card points for gift cards – saving you more on everything from the weekly grocery shop to birthday gifts.


What's involved in the process of refinancing?

These days, there are very few costs involved in refinancing. But the process may take time. While pre-approval typically happens within one business day, there’s also a credit assessment, property valuation, documentation and contract exchange involved.

“For example, if you refinance with Macquarie, there’s no establishment fee and we cover the property valuation fee on properties up to $3 million,” explains Schettino.

“We help our clients work out the cost savings they’ll get through refinancing – it could be around $5,000 in the first year,” says Schettino.

The process of collecting all the necessary documentation can feel time-consuming. But with Macquarie, almost all of it can be completed online.

“We can arrange for an identity check to be done at your home or workplace, and you can sign almost all of the paperwork online,” says Schettino. You might spend half an hour with a dedicated banking specialist on the phone, and the rest is done online and over email.

In theory, you might spend a few hours deciding on your options, tracking down payslips and bank statements, and signing documents. But in reality, you may save thousands of dollars in the short term, and much more in the future.

That sounds like a reasonable trade-off – and a good reason to add refinancing to your list of priorities.

Is refinancing the right option for you? Take our Refinancing Readiness Quiz, and then assess your refinancing power by using our Refinance Calculator.


Key takeaways

  • Your home loan is likely to be your biggest monthly expense – it accounts for between 21%-39% of the average Australian household income.
  • As many as 90% of people don’t know their home loan rate.
  • Refinancing your $500,000 home loan could save you hundreds of dollars a month.

 

Interested in exploring your refinancing options? Request a call and your personal Macquarie banking specialist will guide you through the process.

With great rates from

3.44% pa
Variable rate
3.70% pa
Comparison rate*
For new owner occupied offset home loans only

Want to speak to a home loan specialist about this rate? Request a call back.

Thank you. We will contact you shortly.
There seems to be an error with your request, please contact us.

Enter your contact details and we'll be in touch.

The information you provide on this form will be retained and handled by Macquarie in accordance with our Privacy Policy and we may contact you about products or services we feel may be of interest to you. If you do not wish to provide all details or receive information of this nature, please phone us on 1800 806 310. Phone calls to and from Macquarie may be recorded for quality and assurance purposes. If you do not want your call to be recorded, please advise the Macquarie staff member. If you have used our calculator we have also collected this information to assist with your enquiry.

Make even more of your money

Most people refinance because they want a lower interest rate (and lower monthly repayments). But there are other benefits to weigh up beyond a cheaper deal.

For those Macquarie customers who switch their everyday banking along with their home loan, it’s the digital banking tools that make the difference.

That includes:

  • intuitive budgeting tools, to help you track your spending
  • Apple Pay and Google Pay, so you don’t need to carry a wallet
  • the reassurance of push notifications on your mobile when you make a payment – so you’re on top of security, and
  • redeeming credit card points for gift cards – which means your regular spending could save you even more on the weekly grocery shop or birthday gifts.

What's the downside?

These days, there are very few costs involved in refinancing. But the process does take time. While pre-approval typically happens within one business day, there’s also a credit assessment, property valuation, documentation and contract exchange involved.

“If you refinance with Macquarie, there’s no establishment fee and we cover the property valuation fee on values to $3 million,” explains Schettino. The Mortgage Registration Fee varies from state to state – between $230 and $362 – and there’s a solicitor documentation fee of $363.

“We help our clients work out the cost savings they’ll get through refinancing – it could be around $5,000 in the first year,” says Schettino.

She acknowledges the process of collecting documentation can feel time-consuming. But with Macquarie, almost all the process can be completed online.

“We can arrange for an identity check to be done at your home or workplace, and you can sign almost all the paperwork online using DocuSign,” says Jessup. You might spend half an hour with a dedicated banking specialist on the phone, and the rest is done online and over email.

In theory, you might spend a few hours deciding on your options, tracking down payslips and bank statements, and signing documents. But in reality, you may save thousands of dollars in the short term, and much more in the future.

That sounds like a reasonable trade-off – and a good reason to add refinancing to your list of priorities.

Thank you. We appreciate your feedback and will send it on to our content team.
There seems to be an error with your form, please try again.

Did you enjoy reading this article?

That's good news. Tell us what you liked, so we can do more of it.

Sorry to hear that. Tell us what you'd like us to change.

If you enjoyed reading this article, why not share it?

Simply copy and paste the text and include a link to the article. Please read the Expertise Articles Terms of Use before sharing.

 Rate applies for new owner occupied loans when you borrow up to 70% of the property value with a principal and interest repayment variable rate basic home loan. Subject to change without notice.

* The comparison rates are based on a loan for $150,000 and a term of 25 years. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Information and interest rates are current as at 7 June 2019 and are subject to change.

Fees & Charges

  • At the end of the fixed rate period, the interest rate will revert to the current standard discounted rates. Our Standard Variable rate and Standard Interest Only Variable rate are currently 5.17% pa and 5.66% pa respectively (variable and comparison*) for Basic owner occupied home loans. Our Investment Variable rate and Investment Interest Only Variable rate are 5.88% pa and 6.23% pa respectively (variable and comparison* for Basic investment home loans. You will be notified of the discount that applies to your rate prior to the end of your fixed rate period.
  • Fixed rate loans may be subject to significant break costs. Please refer to your loan contract and terms for details of break costs applicable
  • Fees and charges apply.

Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 and does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire a credit or lending product, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice. All applications are subject to Macquarie’s standard credit approval criteria.

Apple Pay, the Apple logo & iPhone are trademarks of Apple Inc, registered in the U.S. and other countries. Android, Google Pay, Google Play and the Google Logo are trademarks of Google LLC.