Home loans

Refinance

A mortgage is not set and forget.

Who this is for

You have had the same loan for a few years, your fixed term is ending, or your rate has quietly drifted upward while new customers get a better deal. Refinancing is how you make the market compete for your loan again.

Most people who come to us are in one of five situations:

A fixed term is ending in the next six months and nobody has called them.
They have been with the same lender for three years or more and have never asked for a review.
The property has grown in value, so the loan is now a smaller share of what the home is worth.
There are other debts sitting at much higher rates: cards, a car, a personal loan.
The loan no longer fits. No offset account, no redraw, or fixed when it should be split.

What refinancing actually gets you

Four things, and it is worth being clear about which one you are after, because they pull in different directions.

A lower rate. The simplest case. Lenders price new business better than existing business, so loyalty tends to cost money rather than save it. A review is free, and if your current lender will match the market we will tell you to stay.

Access to equity. If your property is worth more than when you bought, that growth is usable. It can fund a renovation, a deposit on an investment property, or a business. You are borrowing more, so the repayment goes up, but you are borrowing at mortgage rates rather than personal loan rates.

Debt consolidation. Folding cards, a car loan, or a personal loan into the mortgage can turn four repayments into one, usually at a lower rate. Two things to weigh before you do. Stretching a five-year debt across twenty-five years lowers the monthly cost but can raise the total considerably. And debts that were unsecured become secured against your home, which changes what is at risk if you cannot repay. Where it suits your situation and the lender agrees, the consolidated portion can be set on a shorter term.

A better structure. An offset account, a split between fixed and variable, or the ability to make extra repayments without penalty. Structure matters more than a headline rate for anyone whose income is irregular or whose plans are likely to change.

How the process runs

Where an application proceeds and is approved, six to eight weeks from first conversation to settlement is common. The steps below are indicative rather than a schedule we can commit to: assessment, valuation and discharge timeframes belong to the lenders, not to us.

The review. We look at your current loan, rate and structure against the market and give you our view on whether moving is worth exploring. If it is not, this is where it stops, at no cost.
The application. After a full assessment of your situation and goals, you choose a lender from the shortlist. We collect your documents and lodge the application.
Assessment and valuation. The lender assesses the application against its own criteria and values your property. We follow up so you do not have to.
The lender decides. If the lender approves the application, formal approval is issued and loan documents are sent to you to sign. Approval is the lender's decision alone, and it is never certain until it is given.
Discharge and settlement. Your old lender processes the discharge and the two lenders settle between themselves. Settlement is normally arranged so the new loan pays out the old one on the same day, and your direct debit switches across.

What to watch

Discharge and application fees, break costs on fixed rates, and honeymoon rates that revert high after the first year. We price the whole move, not just the headline rate, before recommending it.

Two things catch people out more than fees do. The first is resetting the term: moving a loan with twenty-two years left back to a fresh thirty-year term makes the repayment look much better and usually costs far more in total. Whether to keep the remaining term or reset it is worth deciding deliberately rather than by default, and it is one of the things we work through with you.

The second is consolidating debt without changing the habit that created it. If the cards return to their old balances, you have moved short-term debt onto your home and kept the problem. We would rather have that conversation before settlement than after.

What the numbers look like

A rate difference that sounds small does most of its work over time. The figures below are a worked illustration to show how the arithmetic behaves, with the cost of moving included rather than left out of the comparison. They are not an offer, a quote, or a prediction of your result.

Loan balance: $650,000
Years remaining: 25
Current rate: 6.34% p.a.
New rate: 5.84% p.a.
Repayment now: $4,324 / month
Repayment after: $4,125 / month
You keep each month: $199
Cost of the move: $1,100
Break-even point: 6 months
Interest saved over 25 years: $59,840

Illustration only. Assumes principal and interest, monthly repayments, the remaining term kept at 25 years rather than reset, and about $1,100 in discharge, settlement and registration fees. The rates shown are examples used to demonstrate the calculation, not rates available to you or offered by any lender. Any actual rate depends on your circumstances, the property, the lender and its assessment at the time. Run your own numbers with the mortgage calculator, then let us check them against your situation.

What it costs

Refinancing is not free, but it is usually cheaper than people expect. The costs that actually apply:

Discharge fee, charged by your current lender for releasing the mortgage. Typically a few hundred dollars.
Application or settlement fee at the new lender. Frequently waived as part of a refinance offer, so it is worth asking before assuming.
Valuation fee. Often covered by the lender, particularly where an automated valuation is acceptable.
Government registration fees for discharging the old mortgage and registering the new one. These vary by state.
Break costs, only if you are exiting a fixed rate early. These are not a set fee: they depend on how rates have moved since you fixed, and they can be large. Always request the figure in writing from your lender before deciding.
Lenders Mortgage Insurance, only if the new loan sits above 80% of the property value. LMI is generally not transferable between lenders, so refinancing above 80% can mean paying it a second time.

In most cases we are paid a commission by the lender rather than a fee by you. Where any fee would be payable by you, we tell you before you apply, and we disclose the commission arrangements on every recommendation.

Do I qualify

Refinancing is a fresh application, so the lender assesses you as you are today, not as you were when you first borrowed. Five things decide it:

Equity. Most lenders want the new loan at or under 80% of the property value to avoid LMI. Refinancing above that is possible, it just costs more.
Serviceability. Lenders test your income against the loan at an assessment rate above the actual rate. It is a common reason a refinance is declined, and it is why some borrowers cannot move even though the new repayment would be lower than the one they are already making.
Repayment history. Six to twelve months of clean repayments on your current mortgage. A missed payment is not automatically fatal, but it narrows the panel.
Credit conduct. Recent defaults, heavy use of buy-now-pay-later, and frequently overdrawn accounts all show up, and all matter.
Employment. Stable salaried income is straightforward. Self-employed, contract and overseas income are all workable, they simply need the right lender rather than the first one.

If serviceability is the obstacle, there are usually levers: closing unused credit card limits, clearing a small debt, or choosing a lender that reads your income type more generously. That is the part we are useful for.

Everything on this page is general information about how refinancing and home loans work in Australia. It does not take your objectives, financial situation or needs into account, and it is not a recommendation that you borrow.

Nothing here is an offer of credit. No rate, cost, timeframe or outcome described above is guaranteed. Any recommendation we make follows a full assessment of your circumstances, and approval, pricing and conditions are decided by the lender against its own criteria. Where a decision touches on tax, superannuation or estate matters, we work alongside your accountant, financial adviser or solicitor rather than in place of them.

Common questions

How much does it cost to refinance?

Often somewhere between $500 and $1,500 in total, covering the discharge fee from your current lender, any application or settlement fee at the new one, and government registration fees. The actual amount depends on both lenders and on your state, and many lenders waive their own fees to win refinance business. The exception is exiting a fixed rate early, where break costs are calculated from rate movements since you fixed and can run into thousands. Ask your lender for that figure in writing before you decide.

How long does refinancing take?

Six to eight weeks from first conversation to settlement is typical. Most of that is the lender assessing the application, valuing the property, and your current lender processing the discharge. You are never left without a mortgage: the new loan pays out the old one on the same day, and your direct debit simply switches across.

Will refinancing hurt my credit score?

A refinance application creates a credit enquiry, which is recorded on your credit file. The effect on a score is typically small and short-lived, though it varies between credit reporting bodies and depends on the rest of your file. Several applications to several lenders in a short period generally looks worse than one. This is a practical reason to work through a broker: we check your position against lender policy first and lodge one application to the lender we assess as the best fit, rather than testing the market with your credit file.

Can I refinance before my fixed term ends?

Yes, but the lender will charge break costs, and they are not a set fee. They are calculated from how rates have moved since you fixed, so they can be negligible or they can be several thousand dollars. Get the figure in writing, then weigh it against the saving. If your fixed term has less than six months to run, it is usually worth starting the conversation now so the new loan is ready the day the fixed period ends.

How much equity do I need to refinance?

Most lenders want the new loan to sit at or below 80% of the property value, which means at least 20% equity. You can refinance with less, but Lenders Mortgage Insurance applies, and LMI is generally not transferable between lenders, so you could end up paying it a second time. If you are close to the 80% line, a favourable valuation can be the difference, and that is worth planning for rather than leaving to chance.

Can I consolidate other debts into my mortgage?

Yes, and it is one of the most common reasons people refinance. Credit cards, car loans and personal loans can be folded into the home loan, replacing several repayments with one at a much lower rate. The caution is term: spreading a three-year car loan over twenty-five years lowers the monthly cost but increases what you pay in total. Where your budget allows, we set the consolidated portion on a shorter term so the saving is real rather than cosmetic.

Talk this through with a broker

Send your details and we'll come back to you with what these numbers mean for your borrowing, usually within one business day.