Your home loan is likely the biggest debt you will ever carry, yet many borrowers check their rate less often than their phone plan. Reviewing it every six months is one of the simplest ways to make sure you are not paying more than you need to.
The set-and-forget trap
Most people put serious effort into finding a good rate when they first borrow. Once the loan settles, attention moves on to the mortgage repayments, the move and everyday life.
The problem is that lenders often save their sharpest rates for new customers. Existing borrowers who never ask can drift onto a rate well above what the same lender offers a new client walking in the door. This gap is often called the “loyalty tax”, and it quietly adds up over the years.
Why every six months?
Six months is long enough for meaningful change, but short enough that you never sit on a poor deal for years. A lot can move in that time:
• The rate cycle shifts. The Reserve Bank meets regularly, and lenders do not always pass changes on in full or at the same speed.
• Lenders reprice. Banks and non-bank lenders adjust their new-customer offers and cashback deals throughout the year, often with little fanfare.
• Your loan-to-value ratio improves. Each repayment and any rise in your property’s value can push you into a lower-risk pricing tier, which may unlock a better rate.
What half a percent is really worth
A rate gap of 0.50 per cent sounds small, but on a typical western Sydney loan it is worth around $190 a month.
A review doesn’t always mean switching
A good review often ends with no change at all, and that is a perfectly good outcome. Switching lenders is not always the right call:
• Break costs. Leaving a fixed rate early can trigger break fees that wipe out any saving.
• Switching costs. Discharge fees, government registration fees and new lender fees all need to be weighed against the benefit.
• Lenders mortgage insurance. If your equity is below 20 per cent, refinancing may mean paying LMI again.
• Serviceability. A new lender will reassess your income and expenses, and tighter lending rules may limit your options.
• Credit file enquiries. Multiple applications in a short period can affect your credit profile.
How The Finance Korner keeps your rate in check
At The Finance Korner, every home loan client receives a rate review every six months, for the life of their loan. You don’t need to remember to ask; we put it in the diary for you.
Here is how each review works:
1. We check your current position. We look at your rate, balance, loan-to-value ratio and any fixed-term expiry dates.
2. We compare the market. We benchmark your loan against what your current lender and other lenders on our panel are offering borrowers like you.
3. We talk to your lender first. Where there is a gap, we approach your existing lender to request a sharper rate, often the quickest and cheapest path.
4. We weigh up the alternatives. If your lender won’t move, we set out the real numbers on switching, including every fee and cost.
5. You decide. We give you a clear, plain-English summary and a recommendation. Nothing changes unless you’re comfortable with it.
Because we deal with home loans every day, we see where pricing is heading across the market, not just at one bank.
When did you last check your rate?
If you can’t remember, it has probably been too long.