If you're paying more than 7% on your home loan, you're likely overpaying. Most lenders are offering new customers rates between 6.39% and 6.59% on standard variable products, which means borrowers who haven't reviewed their rate in the past year could be losing several hundred dollars a month.
What Your Current Rate Should Look Like
Your rate should sit within half a percentage point of what lenders are offering new customers. Check your latest statement and compare it against the advertised rates from major lenders. If the gap is wider than 0.5%, you're in a position to negotiate or refinance to a new lender.
Consider someone in Baldivis with a $450,000 home loan at 6.95%. That same borrower could refinance at 6.45% and reduce monthly repayments by around $140. Over a year, that's $1,680 back in their pocket. The difference compounds over time, particularly if repayment levels stay the same and the borrower directs the savings toward the principal.
The Baldivis Rate Gap
Many Baldivis homeowners bought in recent years as the suburb expanded south from Rockingham. If you secured your loan between late 2021 and early 2023, you likely locked in a fixed rate that has since expired and rolled onto a higher variable rate. Lenders don't automatically put you on their lowest rate when your fixed term ends. Instead, you roll onto the standard variable rate, which is typically 0.3% to 0.7% higher than what they're offering to new borrowers.
This rollover is where the rate gap opens up. You're now paying a loyalty penalty for staying with your original lender. If your fixed rate has expired, this is the single most effective time to review your position and move.
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How Much a Rate Reduction Actually Saves You
Every 0.1% reduction in your interest rate lowers your repayments and reduces the total interest you'll pay. On a $400,000 loan, a 0.5% reduction cuts monthly repayments by approximately $120. It also reduces the total interest paid over the life of the loan, though the exact figure depends on how long you hold the loan and whether you maintain the same repayment amount.
In our experience, borrowers who refinance and maintain their previous repayment level clear their loan faster without feeling the pinch. The rate reduction creates breathing room, and that breathing room goes straight toward principal if you don't adjust your payment down.
When Switching Lenders Makes Sense
Switching makes sense when the interest savings outweigh the cost of refinancing. Most lenders charge a discharge fee between $300 and $400. There may also be settlement fees and government charges, typically adding another $500 to $800. If your rate reduction saves you more than these costs within six months, the switch is worth it.
As an example, a Baldivis household with a $500,000 loan at 6.79% could refinance at 6.34%. That's a $0.45% reduction, saving roughly $190 a month. Refinancing costs might total $1,200, which means the move pays for itself in just over six months. After that, the savings are pure gain.
What About Break Costs on Fixed Rates?
If you're still inside a fixed rate period and considering a switch, break costs apply. These can range from a few hundred dollars to several thousand, depending on how much rates have moved since you fixed and how long remains on your term. Lenders calculate break costs based on the difference between your fixed rate and the current wholesale rate for the remaining period.
Break costs are not always prohibitive. If rates have risen since you fixed, the break cost may be zero. If rates have fallen, the cost reflects the lender's lost interest income. A mortgage broker can run the numbers and tell you whether breaking makes financial sense or whether it's worth waiting until your fixed term ends.
What Comparison Rate Actually Tells You
Comparison rate bundles the interest rate and most ongoing fees into a single figure. It's designed to help you compare products on a level playing field. If a lender advertises a 5.9% interest rate but has a 6.1% comparison rate, the difference reflects account fees, annual charges, or other costs baked into the loan.
Comparison rate is calculated on a $150,000 loan over 25 years, so it won't perfectly match your situation if your loan size or term differs. Still, it's a useful shortcut. If two lenders have similar interest rates but one has a comparison rate 0.2% higher, the second lender is likely charging more in fees.
How to Know What Rate You Qualify For
Your rate depends on your loan-to-value ratio, employment type, and credit profile. Borrowers with less than 80% LVR and stable employment typically qualify for the lowest rates. If your property has increased in value since you bought, your LVR may have improved without you realising it. Baldivis has seen solid capital growth in established pockets near the town centre and along the Kwinana Freeway, which means many homeowners are now sitting on more equity than they started with.
That equity can move you into a lower rate tier. If your current lender won't budge, another lender will. The key is knowing where you sit and what's available. A loan health check takes around 15 minutes and gives you a clear picture of where you stand and what you could access.
Call one of our team or book an appointment at a time that works for you. We'll compare your current rate against what's available, factor in any costs, and show you exactly how much you'd save by switching.
