Key Takeaway

Refinancing your home loan means switching from your current loan to a new one, either with your existing lender or a different one, to secure a better interest rate, access equity, or change loan features. The process involves comparing rates (using the comparison rate for accuracy), checking for break costs on fixed loans, applying with your chosen lender, and settling the new loan, which typically takes two to six weeks from application to completion.

Introduction

Refinancing can save you thousands of dollars over the life of your loan or give you access to equity for renovations or investment. Australian homeowners often refinance when interest rates drop, when their fixed-rate term ends, or when their financial circumstances change. This guide walks you through the refinancing process step by step, from assessing whether it is worth switching to settling your new loan.

What You Will Learn

This guide covers how to evaluate your current loan, compare new offers using the comparison rate, calculate potential savings after accounting for break costs and fees, submit a refinancing application, and complete settlement. You will also learn common mistakes to avoid and practical tips to make the process smoother.

Step 1: Assess Your Current Loan and Goals

Start by reviewing your existing loan statement to identify your current interest rate, remaining loan term, loan balance, and any features such as an offset account or redraw facility. Check whether you are on a variable rate or a fixed rate, and if fixed, when the term ends.

Decide why you want to refinance. Common reasons include securing a lower interest rate, accessing equity for home improvements or investment, switching from interest-only to principal and interest repayments, consolidating debt, or adding features like an offset account. Your goal will shape which loan products you compare.

According to ASIC MoneySmart, even a small reduction in your interest rate can result in significant savings over the life of the loan, but you must weigh this against the costs of switching.

Step 2: Check for Break Costs and Exit Fees

If you are currently on a fixed-rate loan and want to refinance before the fixed term ends, your lender may charge break costs (also called early termination fees). These costs can be substantial and depend on how much time remains on your fixed term and how interest rates have moved since you locked in your rate. Contact your lender to request a break cost estimate.

Variable-rate loans typically do not have break costs, but check your loan contract for any exit fees or discharge fees, which usually range from a few hundred to over a thousand dollars.

Step 3: Compare Offers Using the Comparison Rate

Shop around for new home loan offers from at least three to five lenders. Compare the advertised interest rate, the comparison rate, fees (application, ongoing, settlement), features (offset account, redraw, extra repayments), and flexibility (ability to make lump-sum payments without penalty).

The comparison rate incorporates most fees and charges into a single percentage, making it easier to compare the true cost of different loans. However, it is calculated on a standard loan amount (A$150,000 over 25 years for owner-occupier loans), so adjust your comparison if your loan size or term differs significantly. Rates are subject to change and vary by lender and your circumstances, so verify current terms directly with lenders or a licensed mortgage broker.

Use online comparison tools from Finder or speak with a mortgage broker who can access multiple lenders and negotiate on your behalf.

Step 4: Calculate Your Potential Savings

Subtract the total costs of refinancing (break costs, exit fees, application fees, valuation fees, settlement fees) from your estimated savings over the period you plan to keep the loan. If you save A$100 per month on repayments but pay A$3,000 in upfront costs, it will take 30 months to break even.

Online refinance calculators can help you model different scenarios. If you plan to move or pay off the loan within a few years, the upfront costs may outweigh the savings.

Step 5: Apply for Pre-Approval

Once you have chosen a lender and loan product, apply for pre-approval (also called conditional approval). This involves submitting proof of income (recent payslips, tax returns if self-employed), identification, current loan statements, and details of your assets and liabilities.

The lender will assess your serviceability (your ability to meet repayments) based on your income, expenses, existing debts, and the loan-to-value ratio (LVR). If your property value has increased or you have paid down your loan, your LVR may have improved, which can qualify you for a better rate or remove the need for lenders mortgage insurance (LMI) if you were previously under 20 per cent deposit.

Read also: Are A$5,000 Cashback Refinance Offers in Australia Worth It?

Pre-approval typically takes a few days to two weeks and is valid for three to six months.

Step 6: Provide Final Documentation and Await Formal Approval

After pre-approval, the lender will order a property valuation to confirm the current value of your home. You may need to provide additional documents, such as updated bank statements or proof of employment.

Once the valuation is complete and all documents are verified, the lender issues formal approval. This process usually takes one to two weeks.

Step 7: Settle the New Loan

Your new lender will coordinate with your old lender to discharge the existing mortgage and settle the new loan. This involves paying out your old loan balance, registering the new mortgage on the property title, and transferring any remaining funds (if you are accessing equity) into your nominated account.

Settlement typically occurs within one to two weeks after formal approval. Your solicitor or conveyancer will handle the legal paperwork, and you will pay their fees (usually A$500 to A$1,500) plus state-based fees for discharging and registering the mortgage.

After settlement, confirm that your old loan is fully closed and that your new loan account is active.

Practical Tips

Look for cashback offers from lenders, which can offset some refinancing costs, but check whether accepting the cashback locks you into the loan for a minimum period. Time your refinance to coincide with the end of a fixed-rate term to avoid break costs. Negotiate with your current lender first, as they may match or beat competitor offers to retain you (called a retention offer). Keep your credit file clean by avoiding multiple loan applications in a short period, as each application can lower your credit score.

Common Mistakes to Avoid

Do not focus only on the advertised rate and ignore the comparison rate and fees. Do not underestimate the time required to gather documents and complete the application. Avoid refinancing frequently, as the costs can add up and negate savings. Do not assume your current lender will offer you their best rate without negotiating. Avoid borrowing more than you need when accessing equity, as this increases your repayments and interest costs.

Frequently Asked Questions

How long does refinancing take?
From application to settlement, refinancing typically takes two to six weeks, depending on the lender’s processing times and how quickly you provide documentation.

Will refinancing affect my credit score?
Yes, each loan application results in a credit enquiry, which can temporarily lower your score. Limit applications to a short period to minimise the impact.

Can I refinance if my property value has dropped?
If your property value has fallen and your LVR is now above 80 per cent, you may need to pay LMI or may not qualify for the best rates. Speak with a mortgage broker to explore your options.

Do I need a solicitor to refinance?
While not legally required, most borrowers use a solicitor or conveyancer to handle the discharge and registration of mortgages, as the process involves legal documentation and state-based fees.

Conclusion

Refinancing your home loan in Australia can deliver meaningful savings and greater flexibility, but it requires careful comparison of rates, fees, and features, as well as an honest assessment of break costs and your own financial goals. Start by assessing your current loan and goals, compare offers using the comparison rate, calculate your break-even point, apply for pre-approval, and complete settlement with the help of a solicitor or conveyancer. If the numbers work in your favour, refinancing is a practical way to optimise your home loan and keep more money in your pocket.

General Advice Warning: This information is general in nature and does not consider your personal objectives, financial situation, or needs. You should consider obtaining personal advice from a licensed mortgage broker or financial adviser before acting on it. This is not personalised financial, lending, or legal advice. Advertised rates differ from the comparison rate, which includes most fees and charges. Rates are current as of July 2026 but change frequently, so verify current terms with a licensed lender or broker before deciding. Eligibility, limits, fees, lenders mortgage insurance, and loan features vary by lender, product, and your circumstances. Break costs on fixed loans and stamp duty on property transactions vary by state and territory. Consult a licensed lender, mortgage broker, or ASIC MoneySmart for your personal situation.