What Would You Do to Your Mortgage? Refinance from CommBank to up, or Is There a Better Offset Loan Deal Right Now?

Techefy on 23/05/2026 - 10:36

Hi all,

Looking for some advice on what you would do in my situation.

I’m currently with CommBank and my home loan rate is 5.98%, which will go up to 6.23% very soon. My loan is around $900k over 30 years (just started early this year), owner occupier, and I bought with a 20% deposit.

I’ve been looking around again for refinance options. When I first researched lenders a few months ago before buying, the best option I found was Up bank, mainly because the rate looked very strong for a loan with an offset account. I couldn’t go with them at the time because my application was declined due to an employment history issue and went with commbank, but that has now been sorted out. So I’m considering refinancing to them.

I did some research now and again my best find so far is Up Bank:
• Current rate: 5.70%
• Expected after latest increase: 5.95%
• Includes offset
• No fees

So if you were in my position, what would you do?
Would you refinance to Up, or are there better options right now for:
• Lowest rate
• Offset account
• Low fees

Keen to hear what others would choose in this situation.

Thank you very much in advance!

Financial Home Loan Loan

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  • JIMB0 on 23/05/2026 - 11:32

    You can drastically reduce the amount of interest you pay simply by paying down the principal. Banks hate this one simple trick.

    Follow me for more advanced financial strategies.

    • 3
    • Techefy on 23/05/2026 - 14:36

      I think paying principal has the same effect as keeping that extra money in an offset account. Keeping them in offset account just gives the flexibility to access that money whenever needed.

      • 5
      • JIMB0 on 23/05/2026 - 14:58

        That would work as well, although mortgages with offset accounts tend to have a higher fees compared to ones with only redraw. With the changes to negative gearing I'm tipping offset accounts will decline in popularity.

        • 1
        • Techefy on 23/05/2026 - 15:07

          Yep thats right.
          Up doesnt have any fees and they also have offsets. The only competitor I found for Up is Unloan. As you said unloan only has redraw and no offsets and their rate is 0.01 less than Up normally.

          • 0
      • muzeeb on 23/05/2026 - 16:07

        Yes and no - the reason banks invented the offset mortgage product is so you can still easily get your hands on that money and spend it.

        Redrawing traditionally has a few more barriers to access, but it’s the same principle.

        Banks hate this one simple trick - pay the principle down, and don’t take they money back out

        • 1
        • JIMB0 on 23/05/2026 - 16:30

          I always thought the main point of offset accounts was that you could access the money later while preserving tax deductibility if the PPOR became an investment. Banks of course seen the opportunity to offer this tax effective product and made good money on package fees.

          • 0
          • muzeeb on 23/05/2026 - 16:43

            @JIMB0: That’s a good use case for them, but not the main point

            The main point is the bank can make you feel like you’re paying your mortgage off sooner - while constantly tempting you with an easily accessible line of credit.

            Most people I know spend out of their offset for big expenses like a new car; maybe a caravan/boat… when they do - it just puts them back in almost the same amount of debt

            • 1
            • Techefy on 24/05/2026 - 10:19

              @muzeeb: Yeah. We need to be well disciplined with offsets

              • 0
              • SlickMick on 25/05/2026 - 08:52

                @Techefy: Yeah, but the same people who spend from offset accounts also redraw whatever's available on loans.

                The non-cynical reason for offset accounts is you start reducing your interest from payday, and every cent that doesn't get spent continues to reduce interest. Without an offset account you have money losing value in a transaction account, only paying a fixed amount off the loan and keeping a buffer.

                I remember when offset accounts first came out - they costs thousands, but showed how they would save you those thousands and more through the extra interest savings.

                I don't see offset accounts going anywhere, though higher rates erode the benefit.

                • 0
                • Techefy on 25/05/2026 - 11:43

                  @SlickMick: yep totally right!

                  • 0
                • muzeeb on 27/05/2026 - 09:21

                  @SlickMick:

                  The non-cynical reason

                  Not trying to offend here, but when it comes to Australia's banks - a healthy dose of cynicism is always required.

                  • 0
                  • SlickMick on 27/05/2026 - 09:50

                    @muzeeb: I don't disagree with you. First they wanted $1000s up front to get in on this new way to save interest.

                    Competition was good and for a while we could get offfset accounts at the same rate as normal loans, only the big non-competitive banks charged $10/m extra.

                    But things have changed: higher rate for offset accounts/ investment loans/ less deposit.

                    The lenders still trying to be competitive seem to struggle. I used to refinance between ubank/ loans.com.au/ homestar etc, but I realised that they don't remain cheapest for long.

                    • 1
  • tenpercent on 23/05/2026 - 11:50

    Are the reasons that you couldn't go with Up originally also the reasons why Commbank gave you a high rate?
    If those issues have now been resolved then it might be worthwhile discussing that with Commbank and negotiating a lower rate to reflect your circumstances.

    • 3
    • Techefy on 23/05/2026 - 14:45

      Thanks for the reply.
      The reason for up rejecting the application was my partners employment history, which combank didnt care at all.
      The interest rate commbank gave me was not abnormally high as one of my friends also got the same rate who signed up around the same time as me (start of this year).
      Anyway i will try to negotiate with commbank re the rate once i decide to whom im going to switch.
      So at the moment hunting the bank with the least interest rate

      • 1
      • Woody982 on 24/05/2026 - 10:10

        Banks and other lenders look at the same things regardless of if you now actually have the mortgage.

        Eg. Ive had the same for 3 years and People's Choice Credit Union wouldn't approve my refinance to them due to my work/pay. I'm a truck driver with set hours of 11 hours paid per shift, unless it goes longer. 7.6 of which is ordinary, the rest overtime.

        So as you can imagine the majority of my income is made up of overtime, which made Peoples Choice decline the refinance, even though they could see my YTD and had last financial years statement…

        • 0
        • Techefy on 24/05/2026 - 10:15

          Thanks for the reply. Yes that’s unfortunate that they dont handle non-general pay slips well. The exact issue i had was my partner not having 6months continuous employment history. Now given that it is satisfied going to go back and check eligibility with Up

          • 0
  • Iwantthebestprice on 23/05/2026 - 20:21

    I’m with UP home, just know they are pretty savage with their valuations (very conservative). I was with BOQ and to refinance I had to pay ~$70K off the loan to bring the LVR to 80%, as their valuation came back way lower than other banks.
    Would be worth submitting the application and see what their valuation comes back with.
    Other then that, love UP, love their free offsets, been with them for 2 years now and have no complaints.

    • 3
    • Techefy on 24/05/2026 - 10:17

      Thanks. That’s a very good point. I guess they will confirm these numbers before they ask me to initiate the mortgage switching process with commbank?

      • 0
  • SlickMick on 25/05/2026 - 08:56

    Don't forget the costs of refinancing. It takes a long time for lower interest rates to cover the extra costs.
    But you can be sure that CBA will never be competitive. It's the switching between loans.com.au and homestar etc that is a fools errand.

    • 2
    • Techefy on 25/05/2026 - 11:25

      Thanks.
      the rate difference is 0.28 percentage points, which is about $2,520 per year on a $900,000 balance, or about $210 per month.
      I don’t think refinancing will cost more than 1000$ from commbank side for my variable rate loan?

      • 0
  • Wiadro on 23/05/2026 - 14:35

    goto unloan.

    • 0
    • Techefy on 23/05/2026 - 14:37

      I considered that. But they dont have offset accounts unfortunately.

      • 0
      • Wiadro on 23/05/2026 - 14:44

        who cares the redraw is instant for me whenever i need

        • -4
        • Techefy on 23/05/2026 - 14:48

          That’s true. But redraws are considered as new loans for tax purposes. If in future i need to convert this property to an investment property that could be unfavourable. So i prefer to keep the money in the offset rather than pay more principal.

          Anyways, what is going to be the unloan rate after the latest rate hike?
          Thanks

          • 1
          • Wiadro on 23/05/2026 - 14:52

            @Techefy: I haven't received any notification yet, so it's still 5.67% for me

            • 0
            • Techefy on 23/05/2026 - 15:04

              @Wiadro: Thanks.
              I see the below notice on their website:
              ‘The RBA increased the cash rate by 0.25% p.a. on 5 May 2026. We’re reviewing our rates and will have an update soon.’

              That would mean they will raise it to around 5.94, which is just 0.01 less than Up. But they have yearly 0.01 discount as well. I would have gone with them if they had offset facility.

              • 0
  • drfeelgood on 24/05/2026 - 09:28

    It really depends on your LVR, check people first out as well https://www.peoplefirstbank.com.au/loans/home-loans/owner-oc…

    • 0
    • Techefy on 24/05/2026 - 10:11

      Thank you!
      My LVR is 80%. I just checked peoplesfirst bank rate and it is showing 6.10% p.a. Comparison rate. Competitive, but doesnt beat Up’s 5.95%

      • 0
      • jsb on 25/05/2026 - 23:12

        You will be surprised what a broker can do. I was in the same boat earlier this year. Was thinking of going with up. But up does not do split loans. Talked to a lending workshop via a deal here on Ozbargain. Roopali was able to negotiate the rate from people choice (now people first) to nearly same rate as Up bank with 3k cashback + extra broker cashback. Your interest will depend upon borrowed amount and LVR but for ref. My current interest rate is 20 points less than their advertised rate and that too after the recent hike. Just for ref. If you consider $1000 as refinance expenses. $3000 cashback alone equates to extra 0.1% discount over the discounted rate for 2 years.

        My advice. Check ozbargain for home loan deals through a broker and talk to them.

        https://www.ozbargain.com.au/node/960470

        https://www.ozbargain.com.au/node/957476

        https://www.ozbargain.com.au/node/956543

        I would vote for Lending workshop. My experience has been really good with them.

        • 0
        • Techefy on 26/05/2026 - 00:54

          Thanks very much for this comment. This is something that I havent considered. I will reach out to them and see what they can offer.

          • 0
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