When to Check if Your Interest Rate is Too High

If you have not reviewed your home loan rate in the past year, there is a reasonable chance you are paying more than you need to.

Many lenders reserve their most competitive offers for new customers, which means existing borrowers can drift onto rates that sit well above what is available elsewhere. This does not happen because you did something wrong. It happens because retention is not always a priority for lenders, and loyalty is rarely rewarded without a prompt.

How Much Higher Than Market Rate is Too Much

A rate that sits 0.50% or more above what new borrowers are currently being offered for the same loan type is worth addressing. Even a difference of 0.30% can add up over the life of a loan, particularly on balances above $400,000.

Consider a borrower in Altona with $450,000 remaining on a variable rate loan at 6.80%. If similar loans are being offered at 6.30%, that 0.50% difference costs around $188 per month in additional interest. Over a year, that is more than $2,200 leaving your account for no additional benefit.

Why Altona Borrowers End up Paying More Than New Customers

Lenders adjust their advertised rates regularly to attract new business, but they do not automatically pass those same adjustments to existing customers. If you took out a loan two or three years ago and have not contacted your lender since, your rate may have been increased during the tightening cycle but not reduced in line with recent adjustments.

Altona sits in a well-established pocket of Melbourne's west, with a mix of period homes near the beach and more recent builds closer to Laverton. Many homeowners here have held their loans for several years, which puts them at higher risk of being on what is sometimes called a loyalty tax rate. That term refers to the gap between what you are paying and what someone walking in today would be quoted for the same product.

Fixed Rate Loans That Have Rolled to Variable

If your fixed term ended in the past 12 months, your loan has likely rolled onto a variable rate set by your lender. That rate is not negotiated and is not always aligned with the lender's current advertised variable products.

In our experience, borrowers who fixed during the low-rate period and have since reverted are often sitting on rates between 6.50% and 7.00%, while current variable products with the same lender may be closer to 6.00% to 6.40%. The revert rate is a default, not a reflection of what is available to you now. You can read more about what happens at the end of a fixed term on our fixed rate expiry page.

When Refinancing Makes Sense and When it Does Not

Refinancing to reduce your rate is worth pursuing if the ongoing savings outweigh the costs involved. Those costs typically include a discharge fee from your current lender, application or settlement fees with the new lender, and valuation costs if required.

If switching lenders would save you $150 per month and the total cost to refinance is around $1,200, you recover that cost in eight months. Beyond that point, the saving is genuine. If the saving is only $40 per month and the cost is similar, it may take more than two years to break even, which changes the calculation.

You may also have the option to negotiate with your existing lender rather than moving. This avoids discharge and application fees entirely, though the rate reduction offered internally is often smaller than what you could access by switching. We regularly see lenders offer a 0.20% to 0.30% reduction when contacted, compared to a 0.50% to 0.80% improvement available through a switch.

Our refinancing page walks through the full process if you are weighing up whether to stay or move.

Comparing Your Rate Without Relying on Advertised Figures Alone

Comparison rate is the figure that includes both the interest rate and most ongoing fees, expressed as a single annual percentage. It gives you a clearer view of what a loan actually costs over time, rather than just the headline rate.

If your current loan has a comparison rate of 6.95% and another lender is offering 6.25%, that 0.70% gap is significant. But if your current loan includes an offset account and the alternative does not, you need to consider whether losing that feature would reduce the value of switching, particularly if you keep a buffer in your offset.

A mortgage broker can pull your current loan details and compare them against what is available across multiple lenders without you needing to apply multiple times. That side-by-side view makes it much clearer whether a switch is worth pursuing.

What to Do if You Think Your Rate is Higher Than it Should Be

Start by confirming what rate you are currently on. Check a recent statement or log into your lender's online portal. Then compare that figure to current advertised rates for the same loan type, whether variable, fixed, or a split.

If the gap is 0.30% or more, contact your lender and ask if they can offer a lower rate to retain your business. Be direct about the fact that you are considering other options. Some lenders will adjust your rate over the phone. Others will not move unless you start a formal refinance process elsewhere.

If your lender will not negotiate or the reduction offered is not enough, speak with a broker who can assess your situation and present alternatives that suit your borrowing profile and property location. Altona properties generally meet standard valuation requirements, so serviceability and loan-to-value ratio tend to be the main factors in approval.

You can also run your details through a loan health check to see where your current rate sits relative to the market and whether switching would deliver a worthwhile outcome.

How Long a Rate Review or Refinance Takes

If you are negotiating with your current lender, a rate reduction can be processed in as little as a few days once approved. If you are refinancing to a new lender, the timeline is typically three to five weeks from application to settlement, depending on how quickly the valuation is completed and whether any additional documentation is required.

Altona is a well-known suburb with consistent property data, so valuations are usually straightforward. Most delays come from incomplete paperwork or waiting on third-party responses, not from the property itself.

If you are still within a fixed rate period and considering a switch, you may face break costs. These are calculated based on the difference between your fixed rate and the current wholesale rate your lender can access for the remaining term. Break costs can sometimes exceed the savings from switching, so it is worth getting a clear estimate before proceeding.

Call one of our team or book an appointment at a time that works for you. We will review your current loan, compare it to what is available now, and walk you through whether staying, negotiating, or switching makes the most sense for your situation.

Frequently Asked Questions