How To Save Money On Your Home Loan
- Property Planning Australia
- 4 hours ago
- 6 min read
Since February 2026, the RBA has lifted rates three times (a combined increase of 0.75%). On a $740,000 mortgage (roughly the size of the average new home loan), that's an extra $5,550 in interest per year or around $462 more coming out of your pocket every month. On a $1 million loan, that jumps to $7,500 per year or $625 a month!
That's real money leaving household cash flow.
But there are concrete steps borrowers can take to reduce what they're paying to make their offset account work a lot harder than it probably is right now.
Here are the best strategies to save money on your home loan.
Step 1: Start with a home loan health check
Don’t panic and jump to the lowest rate you can find online. Instead, properly review what you've already got.
A good strategic mortgage broker should be doing this for you at least once a year. They can review your current rate, compare it to the market and negotiate with your existing lender on your behalf.
At Property Planning Australia, the success rate of rate negotiations with existing lenders sits at around 20–30%.
The reason this works is simple: lenders are very good at competing for new customers but aren't always as generous with existing ones unless someone applies pressure.
As Dave puts it in episode 365 of The Property Trio podcast, "Banks don't usually tap you on the shoulder and say, 'Good news, we'd like to reduce our profit margin.'”
If you don't have a broker actively doing this for you, there's a good chance you're sitting on a rate that was competitive a few years ago but has quietly become lazy.
Step 2: Don't negotiate in the dark
Before you pick up the phone to ask your lender for a better deal, you need to know what else is available, otherwise, you're negotiating without any leverage.
A strategic mortgage broker can benchmark your loan against the broader market first, then go back to your existing lender with context such as "You need to sharpen this as another lender is offering 0.20% lower." That's a very different conversation from simply asking, "Is this your best rate?"
One important thing to know is that if the existing lender won't budge through normal channels, asking to be transferred to the retention team is worth doing.
Retention teams are typically authorised to offer sharper discounts than regular client-facing staff.
We will give our clients a script to help manage that conversation because retention teams will only speak directly with the borrower, not the broker.
Step 3: Don't trust the advertised rate
One of the most common mistakes borrowers make when comparing rates online is assuming the advertised rate is the rate they'll actually receive.
Depending on your loan size, loan-to-value ratio, whether it's owner-occupied or investment property, repayment type and the lender's current appetite for new business, the available discount could be significantly sharper than what's published. A 0.70% advertised discount might actually become 1%, 1.25% or even 1.50% depending on your situation.
This is why DIY comparison can be misleading. The lowest-looking rate online may not turn out to be the lowest rate available to you, and the lender offering it may not even be the right fit for your circumstances.
Step 4: If you refinance, look beyond the rate
If your existing lender still won't come to the party after you've pushed back, refinancing is the next step. But it's not as simple as chasing the lowest headline number.
A proper review should cover the rate, loan product, fees, offset structure, whether a packaged or basic loan suits your situation, and whether the lender fits your broader strategy and income position.
For example, many borrowers are paying an annual package fee of around $395. That can absolutely make sense if you're getting a strong rate discount and using the offset features properly, but if you only need one offset account and don't carry much of a balance, a basic loan with a lower rate and no package fee might leave you better off.
You need to compare the effective cost, not just the headline rate.
However, the best refinance reviews go further. They look at your mortgage strategy, future property plans, risk management and long-term goals, so your loan is not just cheaper today, but better aligned with where you are trying to go.
Step 5: Make your offset account work properly
Offset accounts can be a powerful tool, but only if they're set up and used correctly.
Interest on your home loan is calculated daily, so every dollar sitting in your offset is reducing interest from that day forward. Where people go wrong is keeping large savings in a separate everyday account or term deposit and only moving money across occasionally.
Even a short delay can cost you.
The rule is simple: route all income into the offset from day one. Salary, rental income, bonuses, everything. The sooner money lands there, the sooner it's reducing interest.
Parents often set aside money for their kids in a separate interest-earning savings account, but in almost every case, the interest rate on the home loan is higher than the savings rate on offer. Dave shared this example from one of the major lenders:
$20,000 in an offset against a 6.39% home loan saves around $1,278 per year in interest.
$20,000 in a savings account at 5.00% earns around $1,000 per year — before tax. For those in the top bracket, that drops to barely $500.
The offset wins, every time.
Want to take this further?
How you spend, save and manage your money is fundamental to your long-term financial success, and it's about more than just optimising your offset. A proper money management system, built into your broader mortgage strategy and property plan, helps you manage the things life inevitably throws at you: having a child, relocating, changing careers, starting a business, extended travel, a drop in income, or a period of illness or injury.
More importantly, it boosts your ability to invest and grow wealth, setting you up for what Dave calls the "flexibility stage of life", and gives you the means to support your kids down the track, if that's part of your plan.
At its core, money management comes down to understanding your expenditure and, more importantly, your surplus cash flow. Working through this with your property planner and strategic mortgage broker before making property or investment decisions gives you full clarity on the cash-flow implications of each, and that clarity is liberating. Either you control your money, or your money controls you.
Dave has put together a free eBook, Money Management Principles, that walks through
exactly how to build this system, including a simple account structure built around the Grow, Life, Fun and Investment buckets so you can set your own money goals and decide with confidence how much cash flow goes toward property and how much stays as a buffer.
Step 6: Consider the credit card strategy (with caution)
For disciplined borrowers, using a credit card for everyday spending and paying the full balance at the end of each month can keep more cash in your offset for longer, reducing the interest charged on your home loan.
It only works if you pay the card in full every month. Credit card interest can sit at 20% or more, so if you let a balance roll over, you'll wipe out any benefit very quickly. As Mike put it in episode 365 of The Property Trio, "It's a bit like trying to save money by skipping lunch and then accidentally buying a jet ski."
For anyone who struggles with credit card discipline, the advice is simple: skip this strategy and keep things straightforward.
Step 7: Think about structure - Fixed, variable, and interest-only
A few other strategies worth considering, depending on your situation:
Fixed vs variable
Fixing gives you repayment certainty, but you usually pay a premium for it and may lose the benefits of your offset account. Splitting the loan between fixed and variable can be a good hedge. You get some protection if rates rise, while still keeping part of the loan variable, so savings can sit in offset.
Dave also noted that some lenders are now offering offset accounts against fixed-rate loans, which is worth asking your broker about.
Interest-only repayments
Moving from principal and interest to interest-only can reduce your repayment and ease short-term cash flow pressure.
But it's not a long-term fix.
When the loan reverts to principal and interest, repayments will jump, because you're then paying the balance back over a shorter remaining term. The key is to plan ahead, not wait until the interest-only period is about to expire.
Strategy beats rate every time
Saving money on your home loan doesn’t just come down to finding a cheaper rate this month. The better question, as Dave puts it, is "What loan structure gives me the right balance of cost, flexibility, risk management and future borrowing capacity?"
That's where strategy matters. And if you own more than one property, our team finds gaps in loan structures almost every time they review a new client's position, whether it's cash sitting against the wrong loan, a mismatch in repayment terms, or no plan to turn an owner-occupied home into an investment property down the track.
To go deeper on money management and how to make your mortgage work harder, download Dave's free eBook ‘Money Management Principles’. It covers the full account structure framework we recommend to clients every day.
And if you'd like a review of your own lending, reach out to the team at Property Planning Australia today.
