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Save up to $160,000 on your home loan without leaving your couch

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The secret to getting a better deal on your home loan is simple. It boils down to transparency and access to options beyond your local bank branch. You need to be able to see what rates are available before you can know which one is right for you.

If you visit your local bank branch, you’ll only see one or two options. If you shop around online, you’ll see dozens. Access to a wider range of choices can translate into huge savings. Based on the average Australian home loan of $371,100, households could save up to $5,412 each year in repayments by negotiating or switching lenders to get the best rate available*.

That equates to a saving of $162,458 over a 30-year loan!

6 ways to get a lower interest rate

There are a few easy steps you can take to reduce your home loan repayments.

#1 Shop around and compare

Always get the best deal by comparing lenders. Use an online home loan platform that has all the major banks and other lenders in one place.

While Australia’s big four banks may hold 80% of all residential mortgages, research shows that a new breed of financially savvy borrowers are opting to go with smaller lenders.

Research by Lendi found that 79% of Lendi’s borrowers in a 12 month period chose a lender other than one of the big four banks. The finding comes from analysis of a sample of 2,800+ home loans settled on the Lendi platform.

“We put this down to online borrowers responding to choice and uncovering big savings on their repayments along the way,” says David Hyman, Lendi co-founder and managing director.

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#2 Negotiate with your lender

Many Australian lenders are giving borrowers lower rates than advertised. All you need to do is ask for a more competitive rate.

“By negotiating a better interest rate and home loan package, homeowners could save themselves up to $5,500 by this time next year,” says Hyman. “That’s a pretty good incentive to do some research and assess your options.”

“If you don’t have time or want to negotiate directly with your bank, using a Home Loan Specialist is a convenient way to short-circuit the process - just make sure they are looking at loan options available across the whole market,” adds Hyman.

#3 Consider switching from IO to P&I early

In the current climate, Principal and Interest (P&I) rates are considerably lower than interest only (IO) rates across the board. If you can afford it, consider switching to P&I repayments early, before you interest only period expires. The longer you pay interest only, the higher your repayments will be when you do switch to principal and interest.

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#4 Check your position

Make sure you’re in a strong position by checking your LVR and credit score. A clean credit file along with an LVR below 80% will put you in a strong position to negotiate a lower rate from your lender.

Your LVR = (Loan amount / Value of property) x 100

For example, if you took out a $300,000 loan for a house worth $400,000, then your LVR would be $300,000 divided by 400,000 which is 75%.

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#5 Apply from your couch at 3pm or 3am

The days of putting on a suit before asking your bank manager for a better home loan deal are long gone! We live in a world where you can get whatever you want, when you want it, and that should apply to low home loan rates.

Our easy-to-use online platform allows borrowers to complete an application in a matter of minutes. You can even upload your documents online. Most lenders will typically require:

  • Recent bank statements

  • Employment info e.g. payslips or tax returns

  • PAYG statement/Group certificate

  • Recent statements for your current home loan

  • Identification such as passport or drivers licence

Plus, once your loan is submitted you can check its status 24/7.

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#6 Ask an expert to crunch the numbers (for free)

Before you refinance you’ll need to consider the costs of refinancing. You may incur establishment fees and charges or, if you’re in a fixed rate period, break costs. It’s important to make sure you’ll end up gaining from switching home loans.

Consider asking an expert to crunch the numbers for you. Discuss your needs and loan preferences with a Home Loan Specialist and they’ll work out which loan option makes the most financial sense for you. Select a time for one of our Home Loan Specialist to call you.

Got a home loan question?

We've got answers! Get free expert advice from a Home Loan Specialist today. Choose a time for us to call you here.

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*Calculation based on rates from 37 Australian banks and non-bank lenders including the Big Four (as of 28 November 2017). The difference between the most expensive interest rate (5.67%) and cheapest interest rate (3.64%) for the average home loan was then aggregated over the life of a 30-year P&I loan. Average home loan size according to ABS, September 2017.

Tags: refinance, saving, debt consolidation, low interest

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Important legal stuff
Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 25 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria. Top rates include lenders who are on our panel and are then defined by the circumstances provided by the borrower.
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