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How to save $5,412 by next Christmas (and every year after that)

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Wondering how you can start the year on the right foot financially? The answer is simple, refinance to a better rate.

Our data shows mid-December to mid-January is a peak time for Australian households refinancing to recoup the cost of Christmas and improve their position for the new year.

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“End of year spending combined with positive new year’s resolutions, drives a significant increase in the number of homeowners proactively consolidating debt and securing better interest rates to improve their position for the coming year,” says David Hyman, Lendi co-founder and managing director.

Based on an average Australian home loan of $371,100, households could save up to $162,458 over a 30-year loan by negotiating or switching lenders to get the best rate available*. That equates to $5,412 a year in repayments.

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David Hyman shares his top financial tips:

1. Shop around

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.

2. Compare rates charged for interest only (IO) and principal and interest (P&I) loans

Since June 2017, P&I rates have been considerably lower than IO rates across the board. If you can afford to switch to a P&I loan, you’ll be paying less in interest and more towards being debt-free sooner.

3. Purge expensive debt

Consolidate your higher interest debts like credit cards, car loans and personal loans into your home loan. This can help reduce your overall repayments.

4. Reduce your interest

By keeping cash, such as your salary, in an offset rather than savings account you can automatically reduce the total amount you are paying interest on each month. It can save you thousands over the life of the loan.

5. Split your risk

If you are concerned about future rate rises, consider locking in part of your home loan with a fixed rate and having the remainder on a variable rate.

6. Plan for the future

Before you agree to refinance, consider your ability to make repayments should rates increase by 2 to 3 per cent. Look at your budget and ask yourself whether you will still be able to live within your means.

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

How much can you save with an offset account?

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Got a home loan question? Just ask!

We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here.

The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

  • Calculation based on rates from 37 Australian banks and non-bank lenders including the Big Four (as at 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, david hyman

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates

Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
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Home loan repayment saver tool

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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 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*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.
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