Looking to Refinance your Mortgage?

Refinancing your Home Loan could lower your interest rate and therefore, your repayments. Compare some of the lowest interest rates in Australia from a wide range of lenders to see how much you can save today. - Last updated on 20 Nov 2019

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Home loan refinance rates

If you’re paying over the odds for your home loan, refinancing could potentially save you quite a bit of money. To do it, you’ll need to research home loan refinance rates to find a loan that offers a lower rate than your current one, providing enough of a saving to compensate for the costs involved. This will mean checking out what’s on offer just as you did when you first took out your loan – but with a few extra considerations.

Switch or stay?

Refinancing your loan could mean switching to a new lender or staying with the existing, but moving to another loan they are selling, with better rates. There are advantages and disadvantages to both. If you’re dissatisfied with your current lender, switching could be a relief, but it does mean having to persuade someone new to accept you and get used to how they do things. You may be able to take advantage of a low introductory rate. On the other hand, you may want to maintain a good relationship with your current lender, and discharge fees are sometimes waived if you’re simply moving to a new product with them.

Home loan refinancing interest rates

Refinancing works just the same way as getting a new loan, so you will need to look at the interest rates on offer. Remember that using the comparison rate makes it easy to factor in fees as well and reduces the risk of being caught out by hidden costs. You should also remember that the total amount you will pay in interest also depends on the loan term.

Is it the right time to refinance?

Most people refinance for one of two reasons. Either their circumstances have changed – for instance, you might now be in a position to pay off your loan more quickly – or they have been on a fixed rate loan and the national interest rate has fallen considerably, so much better deals have become available. Usually you will not be allowed to finance until you are at least two years into the loan term.

Costs of refinancing

Most people on fixed rate loans and some people on variable rate loans will have charges to pay if they decide to end the agreement with their lenders early. There can also be costs involved in obtaining the documentation needed to determine whether or not you qualify for the new arrangement you want, and of course you should factor in the cost of your time, as there can be quite a bit of paperwork and negotiation to do.

Main considerations

Although some people are forced to refinance because they can no longer afford their existing monthly payments, most people do so voluntarily. Some borrowers wait for a time when the Reserve Bank interest rate is low and when you can find a deal that meets your requirements. Run through the numbers carefully to be sure of what you can afford, and remember that you could lose money in charges if you can’t commit to your new loan for the agreed length of time.

Pros and cons

  • Pay interest at a lower rate;

  • Pay off your loan sooner;

  • May involve paying discharge and upfront fees. 


​Nick Bendel is a senior property and personal finance writer for RateCity, and an experienced journalist with numerous writing credits to his name. To date. He covers property, home loans, credit cards, superannuation and other bank products, and loves getting elbow-deep in the latest ABS, APRA and RBA data.​


FAQs

Refinancing is when you change your home loan from one loan to another – provided either by the same lender or by switching to a different lender. When you refinance, you are technically paying out your old home loan early and starting up a new one.

Switching lenders is often much simpler than many Australians believe, and can make a significant difference to the finances and lifestyles of many home owners.

To help make comparing different home loan offers simpler, RateCity will compare your financial profile to the offers in the Switch & Save Sale, and filter out the loans that aren’t suitable for you, e.g. investor loans if you’re an owner-occupier. We’ll also calculate the potential savings of each loan compared to your current mortgage, and summarise the benefits offered by each lender so you can make a more informed decision.

Here’s how the refinancing process works at the Switch & Save Sale:

  • Proceed through the Switch & Save Sale wizard, and enter your home loan details and contact details
  • Select a loan out of the ones on sale
  • The lender will contact you to help you to answer any questions and help with the application process
  • Complete your application within 30 days of the event finishing if you decide to proceed
  • Have your property valued by the lender
  • Await approval
  • Settlement

Depending on your lender, this process could take as little as 3 days or as long as 30 days.

If you choose to proceed with an application to refinance, this usually requires some paperwork, such as confirmation of your identity, your income, your residence and any other debts. Once you’ve selected one or more home loan offers from the options at the Switch & Save Sale, the lender(s) will soon be in touch to guide you through their application process and provide assistance if required.

There are several potential benefits to refinancing your home loan, which won’t always apply to every borrower. These benefits include:

  1. Saving  money by moving to a lower interest rate – Moving to a lower interest rate can potentially save you thousands. Of course, you need to make sure your new loan has all the functions you need, and that you are happy with the service your new lender provides.
  2. Paying off your home loan faster – If you refinance onto a lower interest rate but keep making the same monthly repayments, you can pay off your loan faster, and save additional money by doing so. The longer it takes you to pay off your loan, the more you will pay your lender in interest.
  3. Find a home loan that suits your changing needs – A typical home loan lasts for 30 years, and a lot can happen over that time. When you switch to a new lender, it’s worth considering whether these features are important to you:
    • Extra repayments
    • Redraw facility
    • Offset Account
    • Interest only payments
    • Call centre/branch support

^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, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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