With interest rates remaining elevated, many Australians are looking for ways to ease their home loan repayments.
Explore six practical ways to reduce your mortgage costs safely and strategically.
See how refinancing, offsets, and repayment changes can improve flexibility.
An Aussie Broker can help you review your options and plan ahead.
With interest rates remaining higher than many borrowers have been used to, and living costs continuing to rise in 2025, many Australians are looking for practical ways to reduce their monthly home loan repayments without extending their loan term unnecessarily.
The Reserve Bank of Australia (RBA) has held the cash rate steady at 4.35% since late 2024 (checked 21 November 2025), but lenders continue to adjust variable rates independently, meaning many homeowners are still feeling repayment pressure.
Finding ways to lower your repayments safely and strategically can improve financial flexibility and free up breathing room in your budget.
6 ways to reduce your mortgage repayments
1. Negotiate a lower interest rate with your lender
Start by asking your lender for a rate review. If you’ve been making regular repayments, you may be eligible for a more competitive rate, especially if your loan-to-value ratio (LVR) has improved since you first applied.
Example:
If you have a $600,000 loan over 25 years, dropping your rate from 6.4% to 5.9% could reduce your repayments by about $190 per month, and could potentially save more than $55,000 in interest over the life of the loan.
Example only. Actual outcomes depend on your lender, interest rate, and loan structure. Speak with your broker or lender for personalised guidance.
Why it helps: Even a small rate reduction can make a big difference to monthly and long-term costs.
Try our Home Loan Repayment Calculator to see how much you could save by reducing your rate.
2. Refinance to a more competitive home loan
If your current lender can’t offer a better deal, refinancing could help you move to a loan with a lower rate, better features, or both.
Steps to refinance:
Review your loan - know your current rate, fees, and balance.
Compare options - assess rates, comparison rates, and features like offset accounts.
Apply early - allow at least 4-6 weeks for approval and settlement.
Switch - once approved, your new lender pays out the old loan.
Some lenders are offering refinance incentives or discounted variable rates for eligible borrowers, although cashback offers are becoming less common in 2025.
Why it helps: Refinancing can help you align your home loan with your current financial needs and goals.
3. Use an offset account to cut interest
An offset account is a transaction account linked to your home loan. Every dollar in that account reduces the balance on which you’re charged interest.
For example, if you have a $500,000 home loan and $20,000 in your offset, you’ll only be charged interest on $480,000.
Why it helps: Using an offset can reduce interest and shorten your loan term without changing your repayment amount.
4. Make extra repayments where possible
If you can afford to, putting extra money toward your loan, even small amounts, can help reduce your balance faster and lower the interest you pay over time.
This can include one-off lump sums or rounding up regular repayments.
Why it helps: Every extra dollar reduces your loan principal and interest costs.
Try our Extra Repayments Calculator to see how small additional payments can shorten your loan term.
5. Consider a short-term interest-only period
Switching to interest-only repayments can provide short-term relief by lowering your monthly payments.
However, this option means you’re not reducing your principal during that period, and your overall interest cost will be higher.
This approach may suit temporary financial pressure such as maternity leave, reduced hours, or other short-term changes.
Why it helps: It provides breathing room during financial stress but should be approached carefully.
Interest-only periods aren’t a long-term solution. Speak with a broker or financial adviser before making this change to ensure it suits your circumstances.
6. Look for low-fee home loans
Some home loans include ongoing package, annual, or account fees that add to your costs.
Review your loan statement or ask your broker to check if a low-fee or no-package product could meet your needs without paying for features you don’t use.
Why it helps: Minimising fees can reduce your overall loan costs and simplify your repayments.
Tips for managing repayments
Extend your loan term carefully
Extending your loan term can lower your monthly repayments by spreading the balance over more years, but it also increases total interest paid. This may be an option if you’re under financial stress and need short-term relief.
Why it helps: Reduces short-term pressure, but be aware of long-term costs.
Consolidate high-interest debts
If you’re managing multiple loans or credit cards, refinancing to consolidate your debts into your home loan can simplify repayments and potentially reduce your total interest rate.
Why it helps: Streamlines your payments, but remember that extending short-term debt into a long-term loan increases total interest over time.
Read our Refinancing for Debt Consolidation guide for more detail.
What to consider before reducing your repayments
Before making changes to your home loan, think about how each option affects your long-term goals.
Understand your costs: Compare rates, fees, and loan features.
Check your financial buffer: Maintain savings for emergencies.
Seek advice early: Talk to your broker before switching products or lenders.
Stay informed: Monitor RBA announcements and lender rate movements.
Tip: An Aussie Broker can help you find a more competitive loan or structure your repayments in a way that fits your goals, without overextending your loan term.
Book a free^ chat with an Aussie Broker to review your home loan and explore practical ways to make your repayments more manageable.
