Are you paying a loyalty tax on your home loan?
Loyalty is an honourable trait, but not necessarily when it comes to your home loan.
Staying with the same lender might feel like the easy option, but it could also be costing you thousands. Many long‑term borrowers end up on higher interest rates than new customers; a cost we often call a loyalty tax.
With rates and property prices rising, now’s a great time to check whether your loan is still working for you.
Why refinance?
Refinancing simply means replacing your current loan with a new one—either with your existing bank or a new lender. People commonly refinance to:
- Secure a lower interest rate
- Reduce monthly repayments
- Access equity for renovations or investments
- Consolidate debts
- Get better features, like offset accounts or redraw facilities
Even a small rate drop—such as 0.50%—can save thousands each year.
When it makes sense to refinance
Your fixed rate is ending.
Many borrowers coming off low pandemic‑era fixed rates are facing much higher revert rates. Refinancing can soften the jump.
Your rate isn’t competitive.
If your interest rate is above 5.5%, it’s worth exploring alternatives.
You want to use your home’s equity.
Rising property values can help fund renovations, education, or investments.
Your loan no longer suits your lifestyle.
Your financial needs can change—your mortgage should keep up.
What to expect
Refinancing is usually simpler than applying for your first home loan. With guidance from a lending specialist:
- Your current loan is reviewed
- Better options are compared
- A new loan is applied for and managed for you
Settlement is often completed in 2–4 weeks. Many lenders also offer cashback incentives that can help cover fees.
Your credit score may dip slightly due to a credit check, but consistent repayments usually strengthen it again over time.
Should you stay or switch?
Stay with your current lender:
A simple rate review may deliver savings—but usually not the sharpest rates.
Move to a new lender:
Often offers more competitive rates, better features and potential cashback.
Ready to see if you’re paying a loyalty tax?
I’ve recently helped a number of our clients secure a better deal on their home loan. If you'd like a complimentary home loan health check, contact your FMD adviser or book a chat with me.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.