How to Refinance Your Home Loan
Refinancing means switching your existing home loan to a new lender or product — usually to get a lower interest rate, better features, or access your equity.
Why People Refinance
- To get a lower rate — even 0.5% less can save thousands
- To access equity — for renovations, investments, or other purposes
- To consolidate debt — rolling high-interest debt into your mortgage
- To change loan features — e.g. adding an offset account
- To switch from fixed to variable (or vice versa)
When Does Refinancing Make Sense?
The general rule: refinancing is worth it if your savings outweigh the costs within 1–2 years. Consider:
- Rate difference — 0.5% or more is usually worth exploring
- Costs — discharge fees ($150–$400), application fees ($0–$600), and potential break costs (fixed loans)
- Loan term reset — refinancing to a new 30-year term increases total interest paid unless you maintain the same repayments
The Refinancing Process
- Assess your current loan — know your rate, balance, remaining term, and any break costs
- Shop around — compare rates and features across lenders (a broker does this for you)
- Apply for the new loan — provide income docs, existing loan details, property valuation
- Formal approval — lender issues approval and new loan documents
- Settlement — the new lender pays out your old loan, you're transferred over
- Done! — usually completed in 2–6 weeks
Refinancing Costs to Be Aware Of
| Cost | Typical Amount |
|---|---|
| Discharge fee (old lender) | $150–$400 |
| Application fee (new lender) | $0–$600 |
| Valuation fee | $0–$300 |
| Settlement fee | $150–$300 |
| Fixed break cost | Varies (can be $000s) |
The Loyalty Tax
Australian lenders routinely offer better rates to new customers than existing ones. Studies show loyal customers pay an average 0.5–1.0% more than new borrowers. Refinancing every 2–3 years is a proven strategy to keep your rate competitive.