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If you’re paying too much for your home loan, refinancing your mortgage could potentially save you quite a bit of money. Refinancing to a lower rate could mean saving enough on interest charges to quickly make up the cost of refinancing.

Comparing home loan refinance rates can help you find a mortgage that offers a lower rate than what you’re currently paying. Researching home loans for refinancing is a lot like looking for your first mortgage, but with a few extra considerations.

What is refinancing?

Refinancing a home loan refers to swapping one home loan for another. Home owners often choose to refinance their mortgage in order to get a lower interest rate, which can help make their mortgage payments cheaper. Getting a lower rate from a home loan refinance may also help a mortgage holder pay off their home loan sooner.

As well as lower rates, some mortgage holders choose to refinance to get a home loan with more flexible features, such as an offset account or redraw facility. These features can offer more options for managing your mortgage payments.  

Why refinance my home loan?

As a first home buyer, it’s unlikely you would have been offered the most competitive interest rate on your mortgage. However, once you’ve built equity in your home, refinancing could allow you to switch to a lower rate to help you save money in the long term.

There are, of course, other reasons a mortgage holder might consider refinancing, such as:

If you are thinking about increasing your home loan when you refinance, it’s important to consider speaking to a professional for advice specific to your personal circumstances.

Refinance or remortgage?

The process of paying off one loan by taking out another loan goes by several different names around the world, including:

  • Refinancing
  • Remortgaging
  • Switching (when you leave one bank or mortgage lender and go to another)

While different names are sometimes used, the general process remains the same. Before you remortgage your home loan, refinance your mortgage, or switch lenders, it’s important to compare the available options and consider which ones may better suit your needs.

Can anyone refinance, and is it easy?

If you’ve had a mortgage for a few years, a home loan refinance could be a valid option for you. The process of refinancing a home loan is a lot like applying for a whole new mortgage, so a lot of it may likely be familiar to you. 

Unlike when you applied for your first home loan, you may not need to pay a deposit upfront when you refinance your mortgage, at least in the traditional sense. Home loan refinancing often lets you use the equity in your property instead of a traditional deposit.

If you want to refinance your home loan without having to potentially pay thousands of dollars in lenders mortgage insurance (LMI) charges, it may be worth waiting until you have at least 20 per cent equity available in your property to secure the refinanced mortgage. 

Also, if you’ve fixed your home loan interest rate for one or more years, you may need to pay break fees if you refinance from this fixed rate early. The cost of these break fees may mean your mortgage refinance provides less value in the long run.

What is equity?

Your equity is the current value of your home, minus what’s owing on your mortgage. The more of your mortgage principal you can pay off, and the more your property’s value increases, the more equity you may have available in your property.

Equity can be used as security in place of a deposit during a home loan refinance, or when otherwise borrowing money, such as when using a line of credit.

Will refinancing save me money?

Refinancing a home loan may let you benefit from a lower mortgage interest rate, which can potentially help you save money in more ways than one. Your lower interest rate can mean lower mortgage repayments, costing you less from month to month. You could also choose to keep making the same repayments, which could help you pay off your home loan faster, getting you out of debt sooner so you can pay less in total interest charges. 

However, refinancing is not guaranteed to save you money. There are a few ways that refinancing could potentially cost you:

  • Refinancing with less than 20 per cent equity and/or deposit available to secure the loan can mean paying expensive LMI charges.
  • Upfront fees on your new loan, and discharge or break fees (if refinancing from a fixed interest rate) on your old loan can all affect the cost of refinancing – it may take some time for interest savings from a lower interest rate to make up for these costs.
  • Refinancing to a longer loan term may end up costing you more in interest charges over the long term, even if your interest rate is lower.

When I refinance my home loan, should I switch or stay?

Home loan refinancing could mean switching to a new lender. It could also mean staying with your current bank but moving to another loan they offer with better home loan refinance rates. There are advantages and disadvantages to both.

If you’re not happy with your current lender, switching could be a relief. You may be able to take advantage of a low introductory rate from your new lender or enjoy improved customer service.

However, this does mean going through a new lender’s application process, which can take time and effort. You’ll need to consider what rate your loan will revert to once the discounted introductory “honeymoon” period expires, and think about whether you’ll still be able to afford the repayments.

On the other hand, if you’re happy with your current lender’s customer service, you may want to maintain this good relationship, but still get a lower interest rate. If you negotiate with your current lender, you may be able to switch to one of their other home loans with more affordable interest rates, with less hassle than switching to a whole new bank.

How can I find the best refinancing interest rates?

Mortgage refinancing essentially means getting a whole new home loan, so it’s important to compare the interest rates on offer.

While you could look at a list of lenders and go straight to the home loan with the lowest rate, this rate may not be available to everybody. The home loans with the lowest interest rates often have strict eligibility criteria, such as requiring you to hold extra equity in the property.

It’s also important to look at a home loan’s fees, as these can make a big difference to its overall cost. You can look at a home loan’s comparison rate, which combines its interest rate and standard fees, to quickly get an idea of its cost compared to other home loans.

Compare the home loan refinancing rates offered by different lenders with the features and benefits they offer to get a better idea of the value they could offer you. Some low-rate home loans are available from smaller banks and non-bank lenders. Online-only lenders can often offer lower home loan refinance rates, though you won’t be able to visit a branch to discuss your home loan in person.

You should also remember that your loan term will affect the total amount you will pay in interest. A shorter loan term means you may pay more on your mortgage from month to month, but you may pay less interest in total. Likewise, a longer loan term may mean more affordable monthly repayments, but you’ll likely pay more interest on the loan in total.  

Is it the right time to refinance my mortgage?

There are many reasons to consider refinancing your home loan. Maybe the interest rate you’ve previously been paying is much higher than the rates on the market’s newest home loan deals. Maybe your financial circumstances have changed, and you’re now in a better position to pick and choose a home loan that better suits your needs.

Because home loan refinancing uses your equity in a property to secure the mortgage (similar to paying a deposit to buy a property), you may need to keep up with your mortgage payments for a few years and build up your equity before you look into refinancing.

If property values in your area have been rising, you may find that you have more equity in your property than you expect. However, if you have less than 20 per cent equity available, you may end up needing to pay for LMI on the loan, to cover the lender (and not you) against the risk that you’ll default on your repayments.

What other benefits are there to mortgage refinancing?

As well as refinancing to get a lower rate, some borrowers refinance their home loans for other reasons, including:

  • To pay off a mortgage faster: Switching to a lower interest rate but continuing to make higher repayments may allow you to pay off your loan principal and get out of debt sooner.
  • To access flexible features: May include options to manage your home loan repayments and interest charges, such as extra repayments, offset accounts and redraw facilities.
  • To use equity: Equity can be used as security to borrow more money in your mortgage, or to access a line of credit that operates similarly to a credit card.
  • To consolidate debt: Borrowing a bit extra when you refinance may let you clear your outstanding personal loans, car loans, or credit cards, so you can pay less in interest charges from month to month. However, a mortgage’s longer loan term may mean you’ll pay more interest in total on the extra money you borrow.

What are the costs of home loan refinancing?

Much like applying for your first home loan, refinancing a mortgage often involves paying fees and charges. These could include discharge fees on your current loan, and upfront or establishment fees on your new loan. If your current loan is on a fixed interest rate, you may also need to pay break fees if you end this fixed term early.

It’s also worth considering the time and effort involved in mortgage refinancing, which can take anywhere from a few days to a couple of weeks. It may be possible to speed up the home loan refinancing process if you can organise your paperwork in advance.

Pros and cons of refinancing a home loan
  • Lower rates can help you save money or pay off your loan sooner
  • Access flexible features
  • Possible to consolidate other debts into your mortgage
  • May involve paying discharge and upfront fees
  • Longer loan terms and large loan amounts may mean paying more total interest
  • LMI could apply if you have less than 20% equity

Frequently asked questions

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.

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.

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.

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.

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.

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.

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.

Is the lowest home loan rate always the cheapest?

The home loan with the lowest interest rate may not always be the cheapest mortgage option for you. Sometimes a home loan with a low interest rate may charge high fees, which may cost more in total than a mortgage with a higher interest rate and no fees.

Consider checking the comparison rate, which combines interest and standard fees, to get a better idea of the overall cost of different home loan options.

How do I apply for a home improvement loan?

When you want to renovate your home, you may need to take out a loan to cover the costs. You could apply for a home improvement loan, which is a personal loan that you use to cover the costs of your home renovations. There is no difference between applying for this type of home improvement loan and applying for a standard personal loan. It would be best to check and compare the features, fees and details of the loan before applying. 

Besides taking out a home improvement loan, you could also:

  1. Use the equity in your house: Equity is the difference between your property’s value and the amount you still owe on your home loan. You may be able to access this equity by refinancing your home loan and then using it to finance your home improvement.  Speak with your lender or a mortgage broker about accessing your equity.
  2. Utilise the redraw facility of your home loan: Check whether the existing home loan has a redraw facility. A redraw facility allows you to access additional funds you’ve repaid into your home loan. Some lenders offer this on variable rate home loans but not on fixed. If this option is available to you, contact your lender to discuss how to access it.
  3. Apply for a construction loan: A construction loan is typically used when constructing a new property but can also be used as a home renovation loan. You may find that a construction loan is a suitable option as it enables you to draw funds as your renovation project progresses. You can compare construction home loans online or speak to a mortgage broker about taking out such a loan.
  4. Look into government grants: Check whether there are any government grants offered when you need the funds and whether you qualify. Initiatives like the HomeBuilder Grant were offered by the Federal Government for a limited period until April 2021. They could help fund your renovations either in full or just partially.  

How do you find cheap home loans?

With so many interest rate options and repayment types available, finding the cheapest home loan may depend on the type of loan you choose.

Whether you’re looking for an owner-occupier or investor loan, with interest-only or principal and interest repayments, on a fixed or variable interest rate, the cheapest home loan rate available may vary greatly.

One way to find the cheapest option for you is to narrow down your search and compare the options that best suit your individual requirements. RateCity’s home loan comparison tables can help you get started on your search and take the hassle out of shopping around.

How do you determine which home loan rates/products I’m shown?

When you check your home loan rate, you’ll supply some basic information about your current loan, including the amount owing on your mortgage and your current interest rate.

We’ll compare this information to the home loan options in the RateCity database and show you which home loan products you may be eligible to apply for.


Is a home equity loan secured or unsecured?

Home equity is the difference between its current market price and the outstanding balance on the mortgage loan. The amount you can borrow against the equity in your property is known as a home equity loan.

A home equity loan is secured against your property. It means the lender can recoup your property if you default on the repayments. A secured home equity loan is available at a competitive rate of interest and may be repaid over the long-term. Although a home equity loan is secured, lenders will assess your income, expenses, and other liabilities before approving your application. You’ll also want  a good credit score to qualify for a home equity loan. 

Can I take a personal loan after a home loan?

Are you struggling to pay the deposit for your dream home? A personal loan can help you pay the deposit. The question that may arise in your mind is can I take a home loan after a personal loan, or can you take a personal loan at the same time as a home loan, as it is. The answer is that, yes, provided you can meet the general eligibility criteria for both a personal loan and a home loan, your application should be approved. Those eligibility criteria may include:

  • Higher-income to show repayment capability for both the loans
  • Clear credit history with no delays in bill payments or defaults on debts
  • Zero or minimal current outstanding debt
  • Some amount of savings
  • Proven rent history will be positively perceived by the lenders

A personal loan after or during a home loan may impact serviceability, however, as the numbers can seriously add up. Every loan you avail of increases your monthly installments and the amount you use to repay the personal loan will be considered to lower the money available for the repayment of your home loan.

As to whether you can get a personal loan after your home loan, the answer is a very likely "yes", though it does come with a caveat: as long as you can show sufficient income to repay both the loans on time, you should be able to get that personal loan approved. A personal loan can also help to improve your credit score showing financial discipline and responsibility, which may benefit you with more favorable terms for your home loan.

What are the different types of home loan interest rates?

A home loan interest rate is used to calculate how much you’ll pay the lender, usually annually, above the amount you borrow. It’s what the lenders charge you for them lending you money and will impact the total amount you’ll pay over the life of your home loan. 

Having understood what are home loan rates in general, here are the two types you usually have with a home loan:

Fixed rates

These interest rates remain constant for a specific period and are a good option if you’re a first-time buyer or if you’re looking for a fixed monthly repayment. One possible downside of a fixed rate is that it may be higher than a variable rate. Also, you don’t benefit from any lowering of interest rates in the market. On the flip side, if rates go up, your rate won’t change, possibly saving you money.

Variable rates

With variable interest rates, the lender can change them at any time. This change can be based on economic conditions or other reasons. Changes in interest rates could be beneficial if your monthly repayment decreases but can be a problem if it increases. Variable interest rates offer several other benefits often not available with fixed rate home loans like redraw and offset facilities and free extra repayments. 

Does the Home Loan Rate Promise apply to discounted interest rate offers, such as honeymoon rates?

No. Temporary discounts to home loan interest rates will expire after a limited time, so they aren’t valid for comparing home loans as part of the Home Loan Rate Promise.

However, if your home loan has been discounted from the lender’s standard rate on a permanent basis, you can check if we can find an even lower rate that could apply to you.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

Can I get a home renovation loan with bad credit?

If you're looking for funds to pay for repairs or renovations to your home, but you have a low credit score, you need to carefully consider your options. If you already have a mortgage, a good starting point is to check whether you can redraw money from that. You could also consider applying for a new home loan. 

Before taking out a new loan, it’s good to note that lenders are likely to charge higher interest rates on home repair loans for bad credit customers. Alternatively, they may be willing to lend you a smaller amount than a standard loan. You may also face some challenges with getting your home renovation loan application approved. If you do run into trouble, you can speak to your lender and ask whether they would be willing to approve your application if you have a guarantor or co-signer. You should also explain the reasons behind your bad credit rating and the steps that you’re taking to improve it. 

Consulting a financial advisor or mortgage broker can help you understand your options and make the right choice.

Can I borrow extra on my mortgage for furniture?

Yes, you may be able to borrow extra on your mortgage for furniture. This may be done by considering a home equity loan. A home equity loan may allow you to access the equity in your mortgage for furniture via:

  • A line of credit – A pre-approved credit limit based on your equity.
  • A lump sum payment – Like a persona loan, with equity in your home loan used as security.

If you want to avoid borrowing more money, consider accessing cash deposited into your offset account or drawing down on extra repayments with a redraw facility to fund furniture purchases.