If it’s been a few years since you reviewed your home loan, there’s a good chance you’re paying more than you need to. This guide looks at how to assess what your mortgage is costing you, when refinancing may make sense, and what to weigh up before making a change.
This review is especially timely following the Reserve Bank of Australia’s cash-rate increases in 2026. For borrowers, these increases can mean higher minimum repayments and renewed pressure on household cash flow, making it important to check whether your current rate and loan structure remain competitive.
Over time, interest rates move, lending policies change and banks release sharper offers to win new customers. But those more competitive rates are rarely passed on automatically to loyal borrowers who already hold a loan with the same bank.
The result is often a widening gap between the rate offered to attract new borrowers and the rate existing customers continue to pay simply because they have not asked for a review.
This is sometimes referred to as the loyalty tax, and for homeowners who have had the same mortgage for a few years, it can quietly cost thousands of dollars each year. For busy professionals trying to build wealth around demanding careers, that’s money that could potentially be redirected towards:
Paying down debt faster.
Building an investment portfolio.
Funding renovations.
Boosting retirement savings.
Improving household cash flow.
While every situation is different, even a seemingly small rate difference can have a meaningful impact once it is applied to a large mortgage balance over a long loan term.
For example, a 0.40% reduction could mean:
$600,000 loan balance
A saving of around $150 per month, or approximately $1,800 per year.
$1,000,000 loan balance
A saving of around $250 per month, or approximately $3,000 per year.
$1,500,000 loan balance
A saving of around $375 per month, or approximately $4,500 per year.
A good refinancing decision considers far more than the headline interest rate. A lower advertised rate may look appealing, but the benefits can be reduced by discharge fees, application and valuation costs, fixed-rate break costs, lender’s mortgage insurance or the loss of useful loan features. Extending the loan back over a longer term may also lower the immediate repayment while increasing the total interest paid over time.
Refinancing may also be unsuitable if you plan to sell soon, have limited equity, recently changed employment arrangements or would not qualify comfortably under a new lender’s serviceability assessment. For business owners and other professionals, the decision should also account for business debt, asset protection considerations, tax planning, investment strategies and future borrowing needs. In some cases, negotiating a better rate or adjusting the structure with your existing lender may be more practical than moving.
Refinancing may make sense when the expected savings and improved flexibility clearly exceed the costs of changing loans. This could be the case if your current rate is no longer competitive, your fixed term is approaching expiry, your financial position has improved, or you need features that better support your goals, such as an offset account, a different repayment structure, debt consolidation or access to usable equity. The key is to compare the total cost over an appropriate timeframe, not just the initial rate or repayment.
If you cannot remember the last time your mortgage was reviewed, it may be time to take another look. An experienced mortgage broker can simplify the process by comparing suitable options and helping you understand the potential costs, savings and trade-offs.
Your bank may not automatically offer you a more competitive rate, but a proactive review could reveal opportunities to improve cash flow, secure more suitable loan features and strengthen your long-term financial position.
At Cutcher & Neale, we can help you consider how your lending structure fits alongside your broader financial goals. If you are wondering whether your mortgage is still working for you, contact our team to start the conversation.