Refinancing Your Home Loan in Australia: When and How to Save

Australian home loan refinancing documents, calculator, house keys and savings beside a Sydney home

Last updated: 5 August 2026  |  General information only

Refinancing in a nutshell
  • Start by asking your current lender for a better rate.
  • Compare the interest rate, comparison rate, fees, features and remaining loan term.
  • Calculate how long it will take to recover every switching cost.
  • Check break fees, lender's mortgage insurance (LMI) and your serviceability before applying.
  • A lower repayment is not automatically a saving if the new loan extends your term.

A lower home-loan rate can reduce both your monthly repayment and the interest you pay over time. But refinancing is not automatically a good deal. Fees, a longer loan term, fewer useful features or a new LMI premium can wipe out the benefit.

The right question is not simply, “Can I get a lower rate?” It is: “After all costs, will the new loan leave me better off over the period I expect to keep it?”

As at 5 August 2026, the Reserve Bank of Australia cash rate target is 4.35%. Home-loan rates can still vary considerably between lenders and products, so compare loans that match your repayment type, LVR and required features rather than relying on one advertised headline rate.

When refinancing may be worth considering

It may be time to review your loan if:

  • you have not compared your rate with similar loans for at least 12 months;
  • your fixed-rate period is approaching its end;
  • your property value has risen or your balance has fallen, improving your LVR;
  • you are paying for features you do not use, or need an offset, redraw or flexible repayments your current loan does not provide;
  • your income, credit profile or employment position has improved; or
  • you want to access equity and have a clear, affordable purpose for the extra borrowing.
Start with a retention call. Find a comparable loan, then ask your current lender whether it can reduce your rate or move you to a cheaper product. If the offer is competitive, you may save without paying the full cost of switching.

When refinancing may not make sense

  • You expect to sell soon: there may not be enough time to recover the switching costs.
  • You are midway through a fixed term: an early repayment or break cost can be substantial.
  • You have less than 20% equity: the new lender may require LMI, even if you paid it on the original loan.
  • Your financial position has weakened: a new lender must assess your application under its current credit criteria.
  • The new loan resets the clock: extending a 20-year balance back to 30 years can lower repayments while increasing total interest.
Debt consolidation warning: moving a credit-card or personal-loan balance into a mortgage may reduce the interest rate, but it also turns short-term debt into debt secured against your home. Paying it over decades can cost more overall. Keep the repayment period short and avoid building the card balance again.

Refinancing savings calculator

This calculator compares principal-and-interest repayments using the same remaining term. It estimates the repayment difference, break-even time and total interest difference after switching costs.

Current repayment
New repayment
Monthly difference
Break-even point
Estimated interest difference
Net benefit after costs

Illustration only. Assumes rates remain unchanged, repayments are monthly, both loans use the same remaining term, and switching costs are paid separately. It excludes offset balances, extra repayments, future fees and tax effects.

Costs to include before you switch

Fees differ by lender, state, loan type and property. Ask both lenders for written figures rather than relying on a generic estimate.

Possible costWhat to check
Discharge or termination feeThe amount charged by your existing lender to close the loan.
Fixed-rate break costRequest a current payout figure; it can change before settlement.
Application, valuation and settlement feesAsk the new lender which fees apply and which are waived.
Government registration chargesThese vary by state or territory.
LMIIt may apply if the new loan exceeds the lender's acceptable LVR threshold.
Package or annual feesInclude them for every year you expect to keep the loan.
Lost features or benefitsConsider offset access, redraw rules, fee-free extra repayments and linked accounts.
Do not choose on cashback alone. Treat an incentive as one line in the calculation. A higher ongoing rate or annual fee can outweigh a one-off payment.

How to refinance your home loan

  1. Record your current position. Note your balance, rate, repayment type, remaining term, fixed-rate expiry, fees and offset balance.
  2. Estimate your LVR. Divide the loan balance by a realistic property value and multiply by 100. The new lender will make its own valuation.
  3. Ask your lender for a better deal. Compare its retention offer with genuinely similar alternatives.
  4. Compare at least two alternatives. Check the advertised rate, comparison rate, fees, features, repayment type and loan term. Comparison websites may not cover the whole market.
  5. Calculate the break-even point. Divide total switching costs by the expected monthly repayment reduction, then consider how long you expect to keep the property and loan.
  6. Stress-test affordability. Check whether you could still manage repayments if rates rose or your income fell.
  7. Apply for one preferred loan. Repeated applications can create multiple credit enquiries. Required documents vary, but commonly include identity, income, expense and existing-loan evidence.
  8. Review approval and settlement documents. Confirm the final rate, fees, loan term, offset or redraw arrangements and the payout of your old loan.

Refinancing to access equity

Usable equity is not simply the difference between your property's value and your loan balance. A lender may let you borrow up to a chosen LVR, subject to valuation, income, expenses, credit policy and serviceability.

For example, if a lender accepts an 80% LVR on a property valued at $900,000, that lending level is $720,000. With a $500,000 existing balance, the theoretical equity available is $220,000. Approval is not guaranteed, and borrowing the maximum increases both repayments and risk.

Tax treatment follows the use of the borrowed money. Refinancing an existing investment loan does not make private borrowing deductible. If a loan is used partly for income-producing purposes and partly for private purposes, interest generally needs to be apportioned. Keep separate loan splits and clear records, and obtain tax advice for your circumstances.

Frequently asked questions

How often should I review my home loan?

Once a year is a useful habit, and it is also worth reviewing when your fixed period is ending, your lender changes your rate, your equity improves or your circumstances change.

Will refinancing affect my credit score?

A formal application usually involves a credit enquiry. Several applications in a short period may concern lenders, so research first and avoid applying to multiple lenders simply to test eligibility.

Can a self-employed borrower refinance?

Yes, subject to the lender's criteria. Evidence requirements vary and may include tax returns, notices of assessment, business financial statements and transaction records. Ask what is required before applying.

Should I use a mortgage broker?

A broker can assess your needs, explain options and manage an application. Brokers must act in your best interests when providing credit assistance, but their lender panel does not necessarily cover the entire market. Ask which lenders they considered, why the recommended loan suits you, how they are paid and whether any clawback could affect you.

Bottom line

Refinancing can be valuable when the ongoing benefit clearly exceeds every cost and the new loan fits your plans. Compare like with like, keep the remaining term visible, and do not let a lower monthly repayment hide a longer or more expensive loan.

Before applying: get a better-rate quote from your current lender, collect written fee figures, run a same-term comparison, and check the result against how long you expect to keep the loan.

Sources: Reserve Bank of Australia — Cash Rate Target; Moneysmart — Switching home loans; Moneysmart — Choosing a home loan; Moneysmart — Using a mortgage broker; Australian Taxation Office — Interest expenses.

Disclaimer: This article provides general information only. It is not personal financial, credit, legal or tax advice. Rates, fees, lender policies and eligibility criteria change. Consider your circumstances and, where appropriate, obtain advice from a licensed professional before refinancing or increasing your loan.

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