Home Loans & Refinancing Solutions: How to Save Thousands on Your Mortgage

What if the reason you’re paying too much on your home loan isn’t your interest rate – but your home loan’s structure?

Many Australians tend to focus on the interest rate alone when it comes to their home loan, however, the real savings can often happen when you understand the strategies behind the structure of your home loan.  For example, understanding how features such as: offset accounts and redraw facilities work, when to consider refinancing your home loan or using the equity in your home as a potential property launchpad instead of letting it just sit idle.

In this guide we break it all down and give you the practical, ‘insider’ strategies to make your home loan work smarter from day one.  We’ll outline some key home loan strategies, refinancing insights and the many overlooked home loan features that can either cost, or save you, thousands.

1. For First-Home or Property Upsize Buyers: Start with Structure, Not Just Approval

If you’re preparing to buy your first home or upsize the family home, congratulations – it’s a huge milestone.  But getting pre-approved is just the beginning.  The home loan you accept today could impact your finances for future decades.

Some of the key questions all borrowers should ask are:

• Do you need a loan with flexibility for future renovations or family growth?
• Would a fixed rate give you monthly repayment confidence or, would a variable rate suit your cash flow better?
• Should you consider a split loan to hedge your options?

Other considerations include:

• Loan term: For example: a 30-year loan keeps repayments lower, but you’ll inevitably pay more in interest overall.  If you can manage a shorter term (e.g. 20 or even 25 years), the long-term savings can be significant.
• Offset accounts: Even if you’re not saving much now, your future self may thank you for this feature.  It’s one of the easiest ways to reduce loan interest costs without losing access to your funds.

2. Beating the Lender Loyalty Tax

Let’s look at lender psychology.
Ever noticed how new customers get the flashy interest rates, while existing customers quietly pay more over time? This is known as the “lender loyalty tax.” Lenders tend to profit more from borrowers who adopt a ‘set and forget’ approach with their home loans. At the peak of the interest rate hikes, loyal borrowers were, on average, paying up to 0.5% more than new ones.

The fix? Be the squeaky wheel. It’s always a good idea to review the interest rate on your home loan – at least annually. Often, one phone call referencing a lenders competitors’ offer is all it takes to secure a better deal. And, if your lender won’t budge, then it may be time to consider refinancing.

3. Offsets, Redraws & Making Your Home Loan Work Harder

Your home loan structure isn’t just about the interest rate.  Features like offset accounts and redraw facilities can significantly impact how fast you pay off your mortgage and how much you save.

• Offset accounts: An offset account is where you keep surplus funds in a bank account and the balance is offset against your home loan account each day so that the interest charged is based on the overall daily net position.  Every dollar in your offset account reduces the interest charged on your home loan.  The bonus?  Unlike interest earned on savings, this saving isn’t taxed.  For disciplined borrowers, this is one of the most powerful ways to slash interest costs.
• Redraw: A redraw facility allows you to access extra repayments you make on your home loan.  Great for forced savings, but beware – redraw access can have a number of restrictions attached.  It also provides flexibility as you can access your extra repayments when you need, providing a financial cushion for any unexpected expenses.  And, it is always a good option to keep an emergency buffer of funds sitting outside your redraw account.

4. Fixed, Variable, or Both? Why Split Loans Deserve More Love

Not sure which way interest rates are headed? Borrowers can either choose to have a fixed interest rate or a variable interest rate home loan. Or perhaps, have a split loan within their mortgage where you can have both a fixed and variable interest rate component. These are called ‘Split’ Loans and often provide borrowers with peace of mind and loan flexibility particularly where an offset account exists. This hybrid approach is great for borrowers who want the best of both worlds.

5. Refinance with Purpose — Not Just for a Lower Rate

Refinancing isn’t about chasing the lowest headline interest rate.  Done right, it can:

• Unlock equity for future renovations or property investment
• Improve your loan structure (like switching to a loan with multiple offsets)
• Reduce monthly repayments without extending your loan term

But it may not be appropriate for all borrowers, particularly if you:

• Reset the clock to a 30-year term unnecessarily
• Get lured by ‘Cashback’ offers with higher ongoing loan costs
• Switch lenders without assessing fees or repayment flexibility

Be clear on why you’re refinancing and make sure the structure supports your long-term goals.

6. Using Equity as a Financial Springboard

Equity isn’t just a number on paper – it’s an opportunity.  Many Australians use the equity in their homes to:

• Fund renovations
• Purchase an investment property
• Consolidate higher-interest debts

Lenders are becoming more flexible too.  If you were previously stuck with your current lender due to serviceability issues, that may have changed. Lender policy changes and updates are making it easier for strong payers to refinance or access the equity built up in their homes.