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Why refinance?

Thinking about refinancing? If you’ve had your home loan for a few years, there’s a good chance things look a little different now than when you first signed the paperwork.

Interest rates have likely moved (maybe more than once). Perhaps your career has shifted, your family’s grown, you’ve taken on higher duties or you’re working less. Or maybe you’re simply wondering whether your current rate is still a good deal.

Refinancing means replacing your existing home loan with a new one, either with your current lender or a different one. Done carefully, it can reduce what you pay in interest, change how your repayments work or give you access to equity in your home. But it’s not something to rush into. There are costs involved, and the cheapest rate doesn’t always equal the best loan for you.

For most borrowers, refinancing takes anywhere from a couple of weeks to over a month, depending on the lender, your paperwork and whether your property needs a full valuation. While there are a few moving parts, understanding the process upfront can make it feel far more manageable.

This guide walks you through the process step by step so you can decide whether refinancing makes sense, and how to go about it without the stress.

Know your refinancing goals

Before you start comparing rates, it’s worth asking yourself a simple question: What am I actually trying to change?

For some people, refinancing is about lowering their interest rate and reducing repayments. For others, it’s about restructuring their loan, switching from variable to fixed, shortening the loan term, or accessing equity for renovations or investment.

Getting clear on your goal will help narrow down your options.

What it involves

Start by taking stock of your current situation. What’s changed with your income, expenses or life plans? Your income structure can sometimes shift over time – moving from casual to permanent, stepping into leadership, or taking parental leave. Those changes don’t automatically make refinancing harder, but they’re important to factor in before applying.

It’s also worth thinking about how long you plan to stay in your property. Refinancing has upfront costs, so if you’re likely to sell in the next year or two, it may not stack up financially.

Refinancing also doesn’t always mean changing lenders. Sometimes your current lender may offer a better rate or a different loan product that suits your needs without requiring a full switch.

You might be wondering…

Is refinancing only worth it if I get a lower rate?

Not necessarily. A lower rate is common, and even a small reduction can make a difference over the life of a loan, but flexibility, loan features or repayment structure can matter just as much.

How often can you refinance?

There’s no strict rule, but refinancing repeatedly can mean paying fees each time. It’s usually worth reviewing your loan every couple of years rather than reacting to every small rate movement.

Review your current loan

It’s tempting to jump straight into comparison websites. But before you look at what other lenders are offering, you need to understand what you already have.

At this stage, you’re working out your true current cost — not just the interest rate, but:

Refinancing can absolutely save money. But it only works if the numbers are compared properly.

What it involves

Pull out your most recent home loan statement and spend a few minutes with it:

  1. Look at your current interest rate.
  2. Check your remaining balance and loan term.
  3. Notice whether you’re fixed, variable or split.
  4. See what features are attached, like offset, redraw, or extra repayment flexibility.
  5. If you’re on a fixed rate, check when that fixed period ends. Breaking a fixed loan early can trigger break costs, which can sometimes outweigh the savings of switching.
  6. Check whether your lender charges a discharge fee for closing the loan.

It’s also worth contacting your current lender to ask whether they can offer a better rate. Sometimes simply asking the question can result in a reduction, without needing to refinance at all.

You might be wondering…

What’s a discharge fee?

It’s a fee your lender may charge to close your existing home loan when you refinance.

What are break costs?

If you repay a fixed-rate home loan before the fixed period ends, the lender may charge a fee to cover their potential loss.

How do I know if refinancing will actually save me money?

You’ll need to compare the total cost of switching (including any exit fees) against the long-term savings from the new rate.

Check your financial position

Refinancing might feel like a simple swap – old loan out, new loan in. But from a lender’s point of view, it’s a brand-new application.

That means you’ll be assessed all over again to make sure the loan is still suitable and sustainable for where you’re at in life now.

What it involves

Lenders will look at your income, expenses and any existing debts. They’ll also check your credit history and assess what’s called serviceability – whether you could still manage repayments if interest rates increased.

If you work in education, your income may not always look identical year to year. You might have moved from temporary to permanent, increased your FTE or picked up extra responsibilities.

Tip: This is also a good time to tidy up loose ends. Unused credit cards, buy-now-pay-later accounts and personal loans can affect how much you’re able to borrow. Even if you rarely use them, lenders count them in their assessment.

You might be wondering…

Will refinancing affect my credit score?

A home loan application will appear on your credit file. One application isn’t usually a problem. Multiple applications in a short period can raise questions.

What if my income has changed recently?

That’s common. What matters most is that your current income is stable and documented.

Do I need to be in the same job for a certain period?

Every lender has their own policy, but stability and consistency are key factors they’ll consider.

Understand your equity

Equity is one of the most important pieces of the refinancing puzzle. Put simply, equity is the difference between what your home is worth and what you still owe on it.

If your property has increased in value, or you’ve paid down a good chunk of your loan, you may have more equity than you realise. More equity generally means more options.

What it involves

A lot of the time, equity is talked about as your Loan to Value Ratio (LVR). That’s the percentage of the property’s value you’re borrowing.

If your LVR is 80% or lower, you typically won’t need to pay Lenders Mortgage Insurance (LMI) when refinancing. If it’s above 80%, LMI may apply again, even if you paid it when you first bought the property.

Your lender will usually arrange a valuation later in the refinancing process to confirm your property’s current value.

Equity can also allow you to:

But accessing equity increases your loan balance, and it’s borrowing against your home – not unlocking “free” money.

You might be wondering…

How do I estimate my equity?

Start with a rough idea of your home’s current value using recent comparable sales. Your lender’s valuation will determine the official figure.

Can I refinance if my property value hasn’t increased?

Yes, but your LVR will determine whether LMI applies and what rates are available.

Is accessing equity risky?

It can be if you borrow more than you can comfortably repay. The key is ensuring the numbers work long term, not just right now.

Compare loans and costs

Once you understand your goal, your current loan and your equity position, it’s time to see what else is out there.

Comparison websites can be useful, but the lowest rate on the screen isn’t always the lowest cost over time.

What it involves

When comparing options, it’s important to look beyond the headline rate. Here’s your due diligence checklist:

It’s also important to factor in the cost of refinancing itself.

Costs can include:

Every lender is different on what they charge, but what matters is comparing the total cost of the new loan against the long-term savings.

And don’t forget – it’s well worth asking your current lender whether they can match or improve your rate before you decide to switch.

What’s your break-even point?

Here’s the simple way to think about it:

Add up the total cost of refinancing.

Work out how much the new loan will save you each month.

Divide the total cost by your monthly saving.

That tells you how long it will take before you’re genuinely ahead. If it takes three years to break even and you plan to move in two, refinancing may not stack up.

Tip: Use our refinance comparison calculator to estimate how much you could save each month, or if you’re releasing equity, what your new repayments might look like.

You might be wondering…

Are cashback offers worth it?

They can help offset switching costs, but they shouldn’t be the only reason you refinance. Long-term interest savings usually matter more.

Should I use a broker or compare myself?

Both approaches can work. What matters is understanding what you’re signing up for.

Is fixed or variable better right now?

It depends on your appetite for certainty and your view on where rates might move. Some borrowers split their loan between both.

Sort out your paperwork

There are a lot of documents involved in the refinancing process, and the more organised you are, the faster the process tends to move.

The process will likely feel familiar – it’s very similar to when you applied for your original home loan.

What it involves

At this stage, you’re pulling together a clear picture of your financial position.

If you’ve recently changed schools or systems, be prepared to provide confirmation of your new employment. Stability matters, but so does clarity. The more straightforward your file appears, the more straightforward the assessment tends to be.

What you’ll need

Having these ready before you apply can save time and back-and-forth emails:

Photo ID
Proof of income
Bank statements
Existing loan statements
Rates notice

If your income includes allowances or variable components, make sure they’re clearly visible on your documentation.

Tip: It’s helpful to check that names and addresses are consistent across documents. Small mismatches can slow things down.

You might be wondering…

Do I need to provide everything again if I’m refinancing with the same lender?

Often, yes. Even if you’re staying with your current lender, refinancing is still a new application.

How long does this part usually take?

If your documents are ready to go, this stage can move quite quickly. Delays usually come from missing or unclear paperwork.

Apply and complete valuation

Once your paperwork is in and you’ve chosen your loan, the formal application begins.

The lender will review your income, expenses and serviceability to make sure repayments remain manageable if interest rates rise.

What it involves

After you’ve submitted everything:

As part of the process, your lender will arrange a valuation to confirm your property’s current value. Depending on the lender, this may be:

Valuers consider things like:

If you’ve recently renovated, it’s worth making sure that’s clear and documented.

Sometimes lenders will ask for clarification about expenses or specific transactions, which is very normal.

Try to keep your finances steady while this is happening – it’s not a great time for new debt or large purchases.

You might be wondering…

How long does approval take?

This varies between lenders, but straightforward applications with complete paperwork tend to move faster.

What happens if the valuation comes in lower than expected?

Your LVR may increase, which could affect your rate or trigger LMI. In some cases, you may need to adjust the loan amount.

Can I organise my own valuation?

Generally no. Lender valuations are arranged and accepted only through their approved process.

What if my circumstances change while I’m applying?

If your income or employment changes, let your lender know straight away. Transparency now can help avoid issues later.

Make things official

If your application is approved and the valuation stacks up, you’ll receive your formal loan documents.

You’re very close now – take your time and go through everything carefully.

What it involves

Before signing, check:

If something isn’t clear, ask. It’s far easier to clarify now than after settlement.

Once signed and returned, the lender will begin the settlement process.

You might be wondering…

Can I change my mind after signing?

Cooling-off rules vary depending on your circumstances and state, so check before you sign.

When does the new rate actually start?

Your new rate becomes active once settlement is complete.

Settle and switch

Settlement is when your new lender pays out your old home loan and officially takes over.

You don’t usually need to do anything – it’s coordinated behind the scenes between lenders and legal teams.

What it involves

On settlement day:

After settlement, it’s a good idea to:

It’s worth logging in and reviewing everything once it’s live, just to make sure all the details are correct.

You might be wondering…

Will my repayments change immediately?

Yes. After settlement, you’ll move onto the new loan and its repayment structure.

Do I need to cancel anything with my old lender?

Settlement typically handles closure of the loan itself, but it’s worth checking whether you had any linked accounts that need reviewing.

Keep your loan on track

You’ve just hit reset on your home loan – congratulations – but don’t treat it as set-and-forget.

That new loan still needs to work for you long term, and staying proactive can pay off.

What it involves

It’s worth reviewing your loan:

Tip: If your loan allows extra repayments, even small additional amounts can help reduce interest over time. Even adjusting your repayment schedule can make a difference. Paying fortnightly instead of monthly can result in an extra repayment across the year. And if you have an offset account, keeping savings in there can help reduce the interest you pay.

You might be wondering…

What if rates rise again?

If you’re on a variable rate, repayments may increase. Having a buffer or paying slightly more when you can helps smooth those changes.

What if my circumstances change and I’m worried about repayments?

Reach out early. The earlier you have the conversation, the more options are usually available.

Explore your refinancing options

Whether you’re looking to reduce your repayments, access equity or simply check whether your current loan is still competitive, we’re here to help.

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Important information
This guide provides general information only and does not take into account your personal objectives, financial situation or needs. Before making any financial decision, consider whether the information is appropriate for your circumstances and seek professional advice if needed.
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