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What is refinancing?

Refinancing is the act of replacing your current home loan with a new one that offers more advantageous terms. It involves paying off your existing loan and obtaining a new loan, either by negotiating with your current lender or switching to a different loan provider.

Many homeowners choose to refinance for various reasons, each offering potential benefits:

  • Reducing mortgage payments: Refinancing allows you to adjust the terms of your loan to potentially lower your monthly mortgage payments. This can be particularly beneficial if you're facing financial challenges or seeking to free up some cash flow.
  • Lowering interest rates: One of the primary motivations for refinancing is securing a lower interest rate on your mortgage. By doing so, you can decrease the amount of interest you'll pay over the life of the loan, saving a significant sum of money in the process.
  • Transitioning from an expiring fixed-rate loan: If you currently have a fixed interest rate loan that is about to expire, refinancing provides an opportunity to switch to a new loan with either a fixed or variable interest rate. This flexibility allows you to adapt to changing market conditions and potentially secure more favorable terms.
  • Withdrawing equity: Homeowners who have built up equity in their property may choose to refinance to access that equity as cash. This can be useful for funding home improvements, investing in other properties, or covering major expenses like education or medical bills.
  • Consolidating multiple loans: Refinancing also offers the option to consolidate multiple loans, such as credit card debts or personal loans, into a single mortgage repayment. This simplifies your financial management by streamlining various debts into one convenient payment.

When contemplating refinancing, it's essential to assess your total expenses, including application fees, legal charges, and possible penalties for early repayment. Furthermore, seeking advice from a financial advisor or mortgage broker could be beneficial to determine the potential advantages and disadvantges and confirm the loan's compatibility with your overarching financial objectives.

What is a good interest rate?

The definition of a favourable interest rate largely depends on your specific refinancing goals and financial needs. In general, it's important to recognise that the standard interest rate often remains around 2-3% higher than the current base rate. This guideline can serve as a helpful reference as you evaluate the interest rates available to you.

At the time of writing, the lowest interest rates for refinancers paying principal and interest are:

Lowest variable rates: Owner-occupiers



Comparison Rate

Abal Bank5.45%5.58%
Pacific Mortgage Group5.59%5.59%
Northern Inland Credit Union5.59%5.74%
BCU Bank5.64%5.65%
Challenger Bank5.64%5.64%

Source: RateCity database. Based on variable rate home loans paying principal and interest. Data accurate as of 08/11/2023.

Lowest rates: Investors

Investor Rates



Comparison Rate

1 year fixed

Abal Bank



2 year fixed

South West Slopes Credit Union



3 year fixed

Australian Mutual



4 year fixed

Qudos Bank



5 year fixed




SSource: RateCity database. Based on fixed-rate home loans paying principal and interest. Data accurate as of 08/11/2023.

How much could you save by refinancing?

Many homeowners look into refinancing, often because they want to score a better deal with a lower interest rate on their new loan. When you do this, it may provide an opportunity to cut down on those monthly mortgage payments and save some extra cash.

RateCity research shows that a homeowner with a 25-year, $750,000 home loan on the RBA’s average ongoing variable rate for current owner-occupiers of 5.46% (as of January 2023), who refinanced to a lower interest rate of 4.85%, could save $269 per month in repayments, or $3,228 in just a year.

How much a homeowner may save by refinancing

Loan size

Monthly repayments on current home loan at 5.46%

Monthly repayments on new home loan at 4.85% 

Difference per month

Difference in one year































Note: Table is for illustrative purposes only. Based on a hypothetical example of a customer on a 25-year home loan with different loan sizes on a rate of 5.46% switching to a new loan at a lower rate of 4.85%. Current home loan rate based on RBA average ongoing variable rate for current owner-occupiers for January 2023. Does not factor in fees or rate changes.

Refinancing to a lower interest rate can put more cash in your pocket, but remember, there's no such thing as a free ride, and refinancing often comes with costs. The good news is that even though you have to shell out some money up front, refinancing can still be a money-saver over the long haul.

To figure out how long it'll take for your interest savings to cover the cost of switching loans, you can work out your "break-even" point. This is the amount of time it'll take for the reduced monthly payments to make up for what you spent on refinancing.

You can use a refinancing calculator to determine your ‘break-even’ point. Use the calculator to estimate your monthly savings from switching home loans and then compare this to your total switching cost. Knowing how long it’ll take you to recoup the refinancing costs could help you make an informed choice.

What Australia's big 4 banks offer

Thinking of refinancing with one of the big four? Start your home loan refinancing journey by looking at ANZ, Commbank, NAB, or Westpac before switching rates.

Lowest ANZ home loan rate
Interest Rate



Comparison Rate*



Principal and Interest

Lowest NAB home loan rate
Interest Rate



Comparison Rate*



Principal and Interest

Lowest CBA home loan rate
Interest Rate



Comparison Rate*



Principal and Interest

Lowest Westpac home loan rate
Interest Rate



Comparison Rate*



Principal and Interest

Refinance Calculator

Loan Details
Repayment with the new cash rate
  • New Interest Rate4%
  • New Repayment amount$ 2121
  • Monthly addition of$ 91

The result provided is an estimate only. Please read our for more information.

The result provided is an estimate only. Please read our for more information.

Calculator Assumptions and Disclaimers

  • Calculations assume that details entered into calculator, including interest rates, do not change for the lifetime of the loan.
  • Interest is calculated by compounding on the same frequency as the repayment selected, i.e. weekly, fortnightly or monthly.
  • Months are assumed to be of equal length. However given some months are longer than others interest charged may vary depending upon the month.
  • One year is assumed to contain exactly 52 weeks or 26 fortnights. Thus each year has 364 days.
  • All calculations are estimates only; they are not guarantees, pre-qualifications or pre-approvals for borrowing. All results are based solely upon the data entered into the calculator.
  • Calculator does not include the cost of fees or other extra charges.
  • This calculator is for information purposes only. Any advice is general and has not taken into account your personal circumstances.Read our full disclaimer.

Is it a good idea to refinance your home loan?

The decision to refinance your mortgage may depend on several factors. If your equity in the property is less than 10% or 20%, refinancing may incur additional expenses. However, if your primary goal is to reduce your mortgage payments, refinancing to a loan with a lower interest rate could be a favourable choice. In such cases, exploring refinancing options could provide much-needed financial relief for your budget. 

Refinancing to a home loan featuring a reduced interest rate has the potential to make your monthly interest payments more easily affordable. Consequently, this could lead to potential savings over the entire lifespan of your loan. A thorough evaluation of the prospective advantages of refinancing can help you determine whether it matches your financial objectives and represents a viable strategy for improving your financial circumstances. 

Enjoy more flexible features

Refinancing your home loan can provide access to a range of flexible features, such as making extra repayments, using redraw facilities, or taking advantage of offset accounts. These features can improve your ability to manage your mortgage payments efficiently and tailor your loan to your specific needs. 

Reduce your monthly repayments

By refinancing to a loan with a lower interest rate, you can effectively lower your monthly mortgage payments, offering immediate financial relief and freeing up funds for other essential expenses or long-term financial objectives. However, it's important to keep in mind that while your monthly repayments may decrease, you might end up paying more interest over the entire loan term. 

Free up equity

If you've made substantial progress in repaying your home loan, you may have accumulated equity in your property. Refinancing can allow you to tap into this equity, potentially securing another loan or a line of credit. This newfound financial resource can be directed towards home renovations or other significant projects, providing you with a valuable source of funds. 

Consolidate debts

Refinancing also offers the opportunity to consolidate outstanding personal loans or credit card balances into your mortgage. By doing so, you can take advantage of the typically lower interest rates associated with home loans, potentially reducing your overall interest payments in the short term. This strategy can simplify your debt management and help you regain control of your finances. 

When you consolidate debts into your mortgage, you are essentially turning unsecured debts (like credit cards) into secured debts tied to your home. But you may run the risk of losing your home if you can’t keep up with your repayments. Additionally, while interest rates on home loans are often lower, stretching the repayment period for short-term debts, like credit cards and personal loans, may result in paying more interest over the life of the loan. Remember to carefully weigh the benefits against the risks and ensure that refinancing aligns with your long-term financial goals. 

Find a lender that treats you better

A lender who values you as a customer is more likely to provide personalised and attentive service. They will take the time to understand your specific financial needs and goals, resulting in a loan solution that is better tailored to your circumstances. Finding a lender that treats you better can lead to a more pleasant borrowing experience, better loan terms, and a stronger customer-lender relationship. 

If you’re unhappy with your bank’s customer service, refinancing may offer you the opportunity to switch to a lender with improved circumstances. 

Grab a cashback deal

Some lenders offer special discounts and other benefits to new customers, from reduced interest rates to cashback deals. Cashback offers generally range from $2,000 - $3,000, depending on the value of your property. However, as tempting as cashback deals may seem, they can sometimes come at a cost. 

Remember that nothing comes for free in the world of debt. Refinancing rebates or cashback deals offered by lenders could sometimes be marketing gimmicks designed to secure your business. 

While that fact shouldn’t stop you from exploring cashback deals to pocket more savings, remember to consider more than just the discount or cashback offered by the lender, and compare home loan interest rates, fees and features, to find the best possible deal for you and your situation in the long run. 

Deciding whether to refinance a home loan depends on your specific financial goals. Refinancing can offer benefits like lower monthly payments, access to equity, or improved customer service. However, it's crucial to weigh these benefits against associated costs. For example, if you're close to the end of your term, refinancing may not be ideal as it could extend your mortgage, potentially leading to higher interest charges over the new term. Additionally, if you're in the middle of a fixed period, break fees from refinancing could significantly increase your costs. Consider these factors carefully before making a decision. 

What lenders look for when you want to refinance

When you refinance a mortgage, you’ll be applying for a new home loan again. Meaning, you will need to meet the strict lending criteria set by the lender and present a healthy financial situation in your application.  

The lender will be taking stock of key factors when assessing your application, including the purpose of your refinance, your reliability as a customer as well as your credit score

The purpose of your refinance

Your refinancing goal may impact the type of new mortgage that a lender will offer you. For example, if you’re refinancing to gain access to competitive features, you may be offered a variable rate loan with a higher interest rate than the lender’s no-frills, basic home loan options. A home loan with features is typically reserved for variable rate products only, and can often incur higher charges than more basic products. 

Reliability and your credit score

The lender needs reassurance that you can comfortably service your mortgage repayments without risk of late payment or default. This is determined by assessing your income, expenses and creditworthiness. 

When you apply for your new home loan, you will again need to submit personal details, such as recent payslips, tax returns, recent bank statements, a list of your ongoing expenses, any existing liabilities, such as a car loan. 

The lender will assess this information to make sure you can afford the potential new mortgage repayments at the current interest rate, as well as a higher ‘buffer’ interest rate - typically 2-3% higher than its standard variable rate. As interest rates will fluctuate over a 20-30 year loan term, lenders must determine you can meet your repayments on a higher interest rate. 

The lender also performs a hard credit check on your credit file to assess your creditworthiness, and ensure you are the ideal customer to service this new mortgage. If your credit score is sitting in a healthy category, between very good and excellent, you are more likely to gain approval for the refinance. If your credit score has fallen since you last applied for your mortgage, you may find it harder to gain loan approval. 

Loan-to-Value Ratio (LVR)

The LVR refers to the ratio of your outstanding loan amount to your property’s current value. Lenders could have maximum LVR requirements for home loans, typically around 80%. If your LVR exceeds this threshold, it could lead to higher interest rates, or you may need to pay for Lender’s Mortgage Insurance (LMI).

When refinancing, it’s important to consider your property’s current value and how it may impact your LVR. If your LVR exceeds the lender’s designated threshold, you could anticipate potential LMI costs even if you previously paid for LMI when obtaining the original loan.

The cost of LMI varies according to your loan amount but it could add thousands of dollars to your refinancing costs.

Is now a good time to refinance your home loan?

Thinking about refinancing your home loan can be a smart move if your current mortgage is weighing you down with high costs or if you're feeling the pinch of mortgage stress. Refinancing opens the door to other lenders who might offer better deals with lower interest rates, no ongoing fees, and extra perks that suit your financial goals and long-term plans. Switching to a new lender could potentially trim your rates, giving your finances a much-needed boost. 

However, the timing of refinancing is crucial. For many borrowers, the decision to refinance can be as straightforward as reaching the end of their fixed rate period. It's generally not advisable to switch home loans during a fixed rate period due to potential break charges from your current lender. But when this fixed period is up, it could be the time to explore other options. 

For some borrowers, the decision depends on market conditions and interest rate trends. Staying informed about the current economic landscape and seeking advice from mortgage experts can provide valuable insights into whether it's the right moment to refinance. 

When contemplating a home loan refinance, it's important to carefully evaluate your individual circumstances, financial objectives, and the terms offered by prospective lenders. Factors such as interest rates, repayment terms, loan features, and associated costs should all be taken into consideration.

Thorough research and seeking professional advice, perhaps from a mortgage broker, can help you in making an informed decision about whether refinancing is suitable for your specific situation. Regularly following the RBA cash rate updates to see how it's impacting home loans interest rates could help you secure a competitive deal. 

What type of home loan should you refinance to?

When it comes to choosing the best home loan for your refinancing needs, it’s crucial you compare a range of factors, including interest rate type, loan term and features. Different home loan types may suit different homeowner needs. 

Fixed vs variable

Fixed interest rates

A fixed interest rate home loan is one in which the rate is locked in, and will not fluctuate throughout the fixed period - typically 1-5 years. If you’re the type of home loan customer that loves stability in your budget and knowing exactly how much you’ll repay in monthly mortgage payments, a fixed rate loan may be worth considering.  

Variable interest rates

A variable interest rate home loan is subject to market fluctuations, meaning that if the lender were to change its interest rates, your rate would move as well. Interest rates on mortgages are mostly influenced by the Reserve Bank of Australia (RBA)’s cash rate. When the cash rate moves, so too should your variable interest rate - for good and for bad. 

Also, a lender will typically reserve its features, such as an offset account, for its variable rate loans. If loan features are important to you, it is worth keeping this in mind. 

Split rates

It can be challenging to choose between the benefits of fixed and variable rates. This is where a split rate loan comes in. As the name suggests, the lender allows you to split your interest repayments between a fixed and variable rate. It does not have to be split 50/50, but could be 20% variable and 80% fixed, for example. 

A split rate loan may allow you to protect a portion of your repayments from fluctuations in the market, while taking advantage of any interest rate drops and nabbing helpful home loan features in the process. 

Loan term

The loan term is crucial to consider when choosing your ideal refinancing loan. A typical loan term is 25-30 years. If you’ve been repaying your mortgage for some time now, you want to ensure you try and match your remaining loan term with the new loan. Refinancing and extending your loan term back to a full 30 years might not be ideal, as it could see you paying tens of thousands of dollars more in interest over time.

By matching your new loan term with what’s left on your current mortgage, you could potentially pay off your debt sooner while avoiding unnecessary interest expenses. The longer the loan term, the more interest you’ll likely end up paying in the end, despite switching to a lower interest rate. If you’ve already made substantial progress in paying off your current loan, opting for a similar or shorter term during refinancing could help you save some money and own your home sooner.

Features to consider

When comparing your refinancing options, home loan features can be a priority for some homeowners. After all, when used correctly, they may save you in the long run. 

Offset accounts

An offset account is a linked transaction account that helps to reduce, or ‘offset’, the interest charges on your mortgage. Any funds you deposit into this transaction account will help to lower the amount of interest the lender may charge you. For example, if you had a $600,000 home loan with $50,000 in the offset account, you may only be charged interest as if your loan balance was actually $550,000.

Extra repayments

Some lenders may allow you to make extra repayments on your home loan to help you chip away the principal owing and pay off your debt faster than the loan term. Making additional repayments is arguably one of the most successful ways a homeowner can pay off their mortgage early. 

Redraw facility

Wouldn’t you love to access the extra repayments you’ve made into your mortgage for a rainy day? This is where a redraw facility comes in. You may be able to draw down on some or all of the extra repayments you’ve made into your mortgage over the years if your loan offers a redraw facility.

Home loan portability

If you’re planning on selling your home and purchasing a new one at some point, you may want to consider a portable mortgage. Home loan portability is a feature that allows homeowners to stay on the same mortgage but change the security (the property). 

This is considered a more affordable alternative to refinancing, as you can bypass a lot of the fees and costs involved in switching providers, while maintaining the same linked bank accounts and other credit products. This may be worth considering if your current home loan provider already offers portability.

How long does it take to refinance?

The refinancing process in Australia typically takes between two and four weeks, depending on your situation and the lenders involved. 

However, some lenders offer a Fast Track refinance option, which may allow refinancers to switch loans in as little as three days. Even though refinancing can require some of your time and effort, the potential benefits could make a significant difference over your remaining home loan term.

How much does it cost to refinance?

Refinancing isn’t free, but the benefits of refinancing may help to make up for its costs. When you refinance, you may have to pay between a few hundred dollars to a few thousand, in additional charges. 

Fees and costs

Upfront service fees ($570 average)

Covers the admin cost of setting up your new home loan.

Valuation fee ($400 - $550)

Covers the cost of valuing the property as part of the mortgage application process.

Discharge fee ($300 average)

Covers the paperwork when you end a home loan, including when you switch to a new lender.

Break costs ($ varies)

If your existing home loan is on a fixed interest rate, you may need to pay a fee to refinance from this arrangement. This is found by multiplying your remaining loan amount with the remaining fixed term, and the change in costs of funding. 

Lender’s Mortgage Insurance (LMI) ($ varies)

An insurance policy that covers the lender (not the borrower) against the risk that you’ll default on your mortgage repayments. Charged when your deposit and/or equity used to secure a loan is less than 20% of the property value. The higher your property value, the higher the potential LMI. It can range from thousands to tens of thousands of dollars.

Is it easy to switch home loans?

Not so long ago, most borrowers would see out the entirety of their home loan with their initial lender, unchanged from start to finish. Now, it’s more common than ever for mortgage holders to switch or refinance their home loan and change providers, often getting a better deal as a result.

Although you may have spent a long time finding the best terms available when you originally took out your loan, the market may have changed since then and it’s quite possible that another lender’s terms could now be better than those offered by your bank. What’s more, some lenders offer special terms and bonuses, such as cashback offers, to refinancers.

It’s also easier to switch than ever before, and while it may not always be the best option for every borrower, there are circumstances in which switching home loans can save you a lot of money.

How to refinance a home loan

  1. Ask your lender for a better rate: If your current lender will match the market rates, you may save some costs involved in switching
  2. Compare current rates in the market: Compare interest rates, annual fees, features and benefits, as well as eligibility requirements and lending criteria, and consider which loan options may be able to help you achieve your goals.
  3. Calculate your equity and weigh up the costs: Your equity will determine which loans you can apply for. You’ll also need to check what fees and charges you’ll need to pay to exit your current loan and switch to a new loan offer.
  4. Choose your new loan: Based on the information at hand, decide if you still want to switch lenders, and which mortgage you’d like to choose.
  5. Apply, fill out the form and provide all your documents: Click the apply button and have information like your payslips, driver’s license and credit card statements ready. Your prospective lender may then contact you about having your property valued.
  6. Once approved, settle and transfer: If you’re been approved, you will choose a settlement date. Then your new lender will arrange to pay out your older lender. Congratulations, you’ve just refinanced.

What documents do you need to refinance?

The exact paperwork you’ll need to refinance a home loan will depend on the lender, but some of the common requirements include: 

  • Past mortgage statements: To confirm your current interest rate, your equity, and how much is left on your mortgage
  • Employment details and payslips: To confirm your income and employment status
  • Identification details: To confirm your identity and residence
  • Details of any other assets or liabilities: To provide a clear picture of your financial status
  • Bank statements: To confirm your income and regular living expenses
Fact Checked

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

Frequently asked questions about home loan refinancing

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.

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.

Will I be paying two mortgages at once when I refinance?

No, given the way the loan and title transfer works, you will not have to pay two mortgages at the one time. You will make your last monthly repayment on loan number one and then the following month you will start paying off loan number two.

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.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

How much does it cost to change home loans?

When changing or refinancing your home loan, you may focus on paying less interest, but you should also account for other fees charged by your existing lender as well as the new lender. Your current lender will likely charge a loan discharge fee and possibly also a settlement fee, which can together cost you a few hundred dollars. Applying for a new loan will similarly involve an administration fee as well as a property valuation fee if the new lender insists on verifying the value of your home. Further, depending on the state or territory you live in, you may need to pay duties and fees to register the change in your mortgage. 

You may want to think about why you are changing home loans, and then use a refinancing calculator to see how you can get the most out of the switch. For instance, if you are refinancing your mortgage to pay it off faster, you could check if another lender will offer a shorter loan period, involving larger repayments. You should check whether your current mortgage lender is willing to renegotiate your loan terms before you approach a new lender and thus save on some of the fees. 

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Did you find this page helpful?

^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.