Refinance your home loan

Calculate how much time an money you could save by refinancing your home loan. Compare mortgage options to see whether switching may better suit your lifestyle and budget.

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Showing home loans based on a loan of
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Refinance process

Follow these steps to select a new home loan that better suits your needs:

Case studies

See the impact that refinancing and switching lenders made on the lifestyle and personal finances of these Australians:

"When we first moved to Australia, we joined ANZ, so naturally we got a mortgage with them too. But we weren’t happy with their rising rates so I did some research and swapped to Reduce. They were very kind and helpful, and now we’re saving almost $400 a month!"

Ana and Marian
Owner occupiers Truganina, VIC

"We had been on a Westpac mortgage for 10 years when they sent us letters saying they were raising rates. We spoke to ING and they quickly got the ball rolling. I’m self-employed and even for me it was a straightforward process. Now we’re saving over $2,500 a year."

Steve and Emily
Owner occupiers Roweville, VIC

"I’d been with CBA since I was a kid. One day I found a lower rate with Reduce Home Loans on a comparison site and made the switch. Reduce made it easy and straightforward, and now I’m saving almost $5,000 each year on my home and investment property."

Owner Occupier & Investor Southport, QLD

What is refinancing, and what does it mean to refinance your home loan?

Refinancing your home loan simply means switching from your existing loan to a new one that is offered by either your current lender or a different one altogether.

Why should I consider refinancing?

As the market is continuously changing, it may be a good idea to consider regularly shopping around for a better deal on your mortgage. While the most obvious reason to consider refinancing might be to reduce your interest rate, there are plenty of other potential advantages including:

  • Paying off your loan faster with a shorter term
  • Getting a more flexible loan
  • Accessing more competitive features
  • Switching from a variable to a fixed rate, or vice versa
  • Consolidating debts
  • Making the change to a lender that provides better customer service

Are there any disadvantages to refinancing?

It’s important to take into account any fees you may be charged for refinancing your home loan, and whether or not the savings you might make on a lower interest rate would outweigh the cost of making the switch.

Some of the potential penalties you may encounter include a break fee for those currently on a fixed rate loan, a switching fee for refinancing with the same lender, and an application fee when applying for a new loan.

Additionally, refinancing may cost you time and effort when going through a new lender’s application process.

Is refinancing a good idea?

Refinancing your home loan can allow you to benefit from lower interest rates or home loan features and benefits that better suit your financial situation. If your lifestyle and personal circumstances have changed since you first applied for your home loan, and you’ve found a mortgage deal that might be better suited to your needs, you may want to consider refinancing, either with your current lender or a new one.

There are also risks to consider when refinancing. For example, the cost of fees and charges when switching loans may reduce the overall value offered by lower interest rates. You’ll also want to make sure you’re in a financial position where you can comfortably afford to refinance. 

If you’re not sure whether it’s a good idea for you to refinance right now, consider contacting a mortgage broker for more personal financial advice. 

What is a refinance home loan?

Most home loans can be used to refinance, but a refinance home loan is a mortgage offer that’s been specifically designed for borrowers who are refinancing existing loans, rather than buying property for the first time. 

Home loans for refinancing may offer lower interest rates or more flexible home loan features, though they may also require the borrower to hold extra equity in the property to reduce their loan to value ratio (LVR). 

How do I refinance my home loan?

The first step is to identify what you want to achieve by refinancing, whether that is a reduced interest rate, shorter term or something else. Once you have that established, you can begin comparing your current loan to others on the market and create a shortlist of those that fit your goals. 

Be sure to weigh up the total switching costs you may incur with any potential savings before making a decision to apply for a new loan. Our home loan refinance calculator may come in handy here.

If you are happy with your current lender, you may also consider negotiating with them to switch to one of their more competitive loans in order to save the time and energy it takes to apply for a loan at a new bank.

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

When should I switch home loans?

The answer to this question is dependent on your personal circumstances – there is no best time for refinancing that will apply to everyone.

If you want a lower interest rate but are happy with the other aspects of your loan it may be worth calling your lender to see if you can negotiate a better deal. If you have some equity up your sleeve – at least 20 per cent – and have done your homework to see what other lenders are offering new customers, pick up the phone to your bank and negotiate. If they aren’t prepared to offer you lower rate or fees, then you’ve already done the research, so consider switching.

What is a line of credit?

A line of credit, also known as a home equity loan, is a type of mortgage that allows you to borrow money using the equity in your property.

Equity is the value of your property, less any outstanding debt against it. For example, if you have a $500,000 property and a $300,000 mortgage against the property, then you have $200,000 equity. This is the portion of the property that you actually own.

This type of loan is a flexible mortgage that allows you to draw on funds when you need them, similar to a credit card.

What are extra repayments?

Additional payments to your home loan above the minimum monthly instalments, which can help to reduce the loan’s term and remaining payable interest.

How does a line of credit work?

A line of credit functions in a similar way to a credit card. You have a pre-approved borrowing limit and can draw on as little or as much of that sum as you need it, with interest paid on the outstanding balance.

Popular products include Commonwealth Bank Viridian Line of Credit, ANZ Equity Manager, Westpac Equity Access and NAB Flexiplus.

What is an investment loan?

An investment loan is a home loan that is taken out to purchase a property purely for investment purposes. This means that the purchaser will not be living in the property but will instead rent it out or simply retain it for purposes of capital growth.

What is equity? How can I use equity in my home loan?

Equity refers to the difference between what your property is worth and how much you owe on it. Essentially, it is the amount you have repaid on your home loan to date, although if your property has gone up in value it can sometimes be a lot more.

You can use the equity in your home loan to finance renovations on your existing property or as a deposit on an investment property. It can also be accessed for other investment opportunities or smaller purchases, such as a car or holiday, using a redraw facility.

Once you are over 65 you can even use the equity in your home loan as a source of income by taking out a reverse mortgage. This will let you access the equity in your loan in the form of regular payments which will be paid back to the bank following your death by selling your property. But like all financial products, it’s best to seek professional advice before you sign on the dotted line.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Is there a limit to how many times I can refinance?

There is no set limit to how many times you are allowed to refinance. Some surveyed RateCity users have refinanced up to three times.

However, if you refinance several times in short succession, it could affect your credit score. Lenders assess your credit score when you apply for new loans, so if you end up with bad credit, you may not be able to refinance if and when you really need to.

Before refinancing multiple times, consider getting a copy of your credit report and ensure your credit history is in good shape for future refinances.

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.