How Often Should You Reassess Your Home Loan to Secure the Best Rate?
For most Australians, a home loan is the largest financial commitment they’ll ever make — and while locking in a competitive rate at the start is important, it’s not a set-and-forget arrangement. Regularly reassessing your mortgage can help ensure you’re always paying a competitive interest rate, saving you thousands over the life of the loan.
But how often should you check in on your mortgage? And what signs should prompt you to reassess your home loan?
This guide explores why regular home loan reviews matter, how often you should reassess, and practical steps to help you stay ahead of the market — and your lender.
Why Reassessing Your Home Loan Matters
Over time, economic conditions, lender competition, and your own financial situation change — often leaving your original mortgage less competitive.
Regularly reviewing your home loan can help you:
- Save on interest: Even a small rate cut can add up to substantial savings.
- Adapt to your life: As your finances change, you may need extra features or more flexible repayments.
- Avoid the loyalty penalty: Many lenders reserve the best rates for new customers, leaving long-term borrowers paying more — unless they push back.
Example:
On a $500,000 mortgage, moving from a 6.0% rate to a 5.5% rate could save you roughly $125 per month — or around $45,000 over 30 years.
How Often Should You Reassess Your Home Loan?
There’s no one-size-fits-all answer, but a general rule of thumb is to review your home loan every 12–24 months, or sooner if there’s a major shift in the market or your personal circumstances.
Here’s a closer look at when to act.
1. Once a Year: Stay Proactive
An annual mortgage health check is one of the best ways to stay on top of your finances.
In your yearly review:
- Compare your current rate with market averages.
- Check if your lender has passed on recent RBA rate cuts.
- Look at new loan products that may better suit your needs.
Even if you’re not ready to switch, an annual check keeps you informed and ready to negotiate.
2. When Interest Rates Move
Major movements in the RBA’s cash rate can impact your repayments — but lenders don’t always pass on the full change, especially for existing customers.
Example:
If your variable rate increases by 0.25%, repayments on a $500,000 loan can rise by around $70 per month.
A quick reassessment may uncover better deals with other lenders or fixed-rate options that protect you from further hikes.
3. After Major Life Events
Changes in your personal life can dramatically impact what you need from your mortgage.
Triggers to reassess:
- New job or salary boost: You may want a loan with extra repayment flexibility or faster pay-down options.
- Starting a family: Flexible repayments or an offset account can help with cash flow.
- Property value increase: If your home has appreciated, your loan-to-value ratio (LVR) may have dropped below 80%, making you eligible for lower rates.
- Debt reduction: Paying off other debts can improve your credit profile, giving you leverage in negotiations.
4. Every 2–3 Years: Time for a Refinancing Check
If you haven’t refinanced in 2–3 years, you’re likely paying more than you need to.
Why?
- Banks often increase rates quietly for existing customers while offering sharper deals to attract new borrowers.
Example:
Refinancing a $400,000 loan from 6.0% to 5.2% could save around $3,200 per year in interest.
How to Reassess Your Home Loan Step by Step
1. Review Your Loan Statement
Start by gathering the facts:
- Current interest rate
- Comparison rate (includes most fees)
- Remaining loan term and balance
- Monthly repayments
- Loan features and conditions
This gives you a clear snapshot of where you stand.
2. Compare Current Market Rates
Use online comparison sites, lender websites, and mortgage brokers to benchmark your rate.
Tip: Focus on comparison rates, not just advertised rates — they account for most fees and reflect the true cost of the loan.
3. Check Your Credit Score
Lenders use your credit score to determine the rates they offer.
Get your report from providers like Equifax, Experian, or Illion — for free — and correct any errors before applying.
Improving your score:
- Pay bills and debts on time
- Reduce credit card balances
- Limit new credit applications
4. Negotiate With Your Current Lender
Before jumping to refinance, call your current lender’s retention or mortgage discharge team.
Share:
- Your loyalty and repayment track record
- Better rates you’ve found elsewhere
- Your improved financial position or LVR
Lenders often match or beat competitors’ rates to avoid losing you.
5. Consider Refinancing
If your lender won’t budge, it’s time to shop around.
Refinancing might involve:
- Moving to a lower-rate lender
- Switching from variable to fixed (or vice versa)
- Consolidating debts into your home loan
Tip: Weigh upfront costs (like discharge fees, application fees, and valuation fees) against long-term savings.
Calculate your break-even point — how long it takes to recover refinancing costs with your new repayments.
Key Factors to Consider During Review
Variable vs Fixed Rates
- Variable loans → More flexible but exposed to rate hikes.
- Fixed loans → Provide repayment certainty but may have higher break costs or fewer features.
Loan Features
Look beyond just the rate:
- Offset accounts: Reduce interest by offsetting your savings.
- Redraw facilities: Access extra repayments when needed.
- Flexible repayments: Save on interest by paying fortnightly or making lump-sum repayments.
Refinancing Costs
Common refinancing expenses:
- Exit fees or break fees from your current lender
- Application fees for the new loan
- Property valuation and legal costs
Ensure your potential savings outweigh these costs before proceeding.
The Risks of Not Reviewing Your Loan
Failing to reassess regularly can lead to:
- Unnecessary interest costs: You may be stuck on an uncompetitive rate.
- Missed opportunities: Changing personal or market conditions could unlock savings or better loan features.
- Lender complacency: Banks rarely offer discounts to passive borrowers — you need to ask.
When to Act Quickly
Some situations call for immediate reassessment:
- The RBA announces multiple rate hikes.
- You experience a major change in income or expenses.
- Your fixed-rate term is about to expire.
- You plan to renovate, invest, or move house.
Final Thoughts: Make Home Loan Reviews a Habit
Reassessing your home loan is one of the simplest, most powerful ways to take control of your finances.
By reviewing your mortgage every 12–24 months — or after major life or market changes — you can:
- Secure the best rate
- Save thousands in interest
- Align your loan with your financial goals
Whether it’s negotiating a better deal with your current lender or refinancing to a more competitive option, being proactive pays off.
Remember: a little effort today can deliver significant savings tomorrow.
