Want to boost your savings? The answer could be refinancing.

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How to spend less on your home loan


Raising a family often means shifting priorities. Juggling school or child-care 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 education fund you keep talking about?

Your home loan could be the answer. And the good news is, it’s not as hard as you might think.


The cost of complacency

On average, Australians spend about 25% of their monthly disposable income on their home loan. That’s likely to be your biggest single expense – and it’s one you have control over.1

“In this competitive interest rate environment, you need to be aware of what your current rate is, and what’s available,” explains Jason Jessup, Home Loan Product Manager for Macquarie Personal Banking.

Yet Pocketbook’s analysis of 200,000 users in 2016 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% more than they should.2

Let’s put that into perspective.

If you have a $500,000 home loan , and you’re paying 1.75% more than the best rate available to you, you could be paying around $6,000 a year more than you need to in interest rate payments3. That’s over $500 a month – which could certainly be put to better use in your life. It 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 on their home loan – and eventually paying the loan off sooner,” says Lucinda Schettino, Sales Engagement Manager for Macquarie Personal Banking.


Supercharge your savings

After refinancing, savvy homeowners can choose to keep paying the same, higher, monthly repayment as on their old home loan – and by paying that little bit extra, they can shave years off their 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.” If you keep adding $500 extra a month to your offset on that $500,000 loan, you could pay it off eight years sooner – and save an extra $100,000 in interest. “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.

Not sure how an offset home loan works? Read this article.

Now with a
low rate

3.75% pa
Variable rate
4.00% pa
Comparison rate*
For new owner occupied offset home loans only

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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.

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 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 6 December 2018 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 5.36% pa and 5.75% pa respectively (variable and comparison*) for Basic owner occupied home loans. Our Investment Variable rate and Investment Interest Only Variable rate are 5.97% pa and 6.32% 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.

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