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.

Find and compare refinance home loans

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2.19%

Variable

2.22%

Reduce Home Loans

$1,299

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.91

/ 5
View Now
More details

2.19%

Variable

2.22%

Yard

$1,299

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.04

/ 5
More details

2.29%

Variable

2.32%

Homestar Finance

$1,314

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.91

/ 5
More details

1.90%

Fixed - 1 year

2.39%

Reduce Home Loans

$1,257

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.69

/ 5
View Now
More details

2.39%

Variable

2.39%

Athena Home Loans

$1,329

Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied

3.57

/ 5
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2.39%

Variable

2.40%

Tic Toc

$1,329

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.48

/ 5
View Now
More details

1.98%

Fixed - 1 year

2.41%

Homestar Finance

$1,269

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.61

/ 5
More details

2.14%

Fixed - 3 years

2.41%

UBank

$1,292

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.84

/ 5
View Now
More details

2.49%

Variable

2.43%

Athena Home Loans

$1,344

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.35

/ 5
View Now
More details

2.14%

Fixed - 1 year

2.46%

UBank

$1,292

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.00

/ 5
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More details

1.99%

Intro 12 months

2.47%

loans.com.au

$1,343

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.64

/ 5
View Now
More details

2.19%

Fixed - 3 years

2.53%

Macquarie Bank

$1,299

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.48

/ 5
More details

2.59%

Fixed - 5 years

2.53%

UBank

$1,359

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.63

/ 5
View Now
More details

2.59%

Variable

2.59%

Reduce Home Loans

$1,359

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.45

/ 5
View Now
More details

2.59%

Variable

2.60%

HSBC

$1,359

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.25

/ 5
View Now
More details

2.64%

Variable

2.64%

Macquarie Bank

$1,367

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.12

/ 5
More details
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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.  

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.

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.

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.

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

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

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.

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. 

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

What is an interest-only loan? How do I work out interest-only loan repayments?

An ‘interest-only’ loan is a loan where the borrower is only required to pay back the interest on the loan. Typically, banks will only let lenders do this for a fixed period of time – often five years – however some lenders will be happy to extend this.

Interest-only loans are popular with investors who aren’t keen on putting a lot of capital into their investment property. It is also a handy feature for people who need to reduce their mortgage repayments for a short period of time while they are travelling overseas, or taking time off to look after a new family member, for example.

While moving on to interest-only will make your monthly repayments cheaper, ultimately, you will end up paying your bank thousands of dollars extra in interest to make up for the time where you weren’t paying off the principal.

What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

How can I pay off my home loan faster?

The quickest way to pay off your home loan is to make regular extra contributions in addition to your monthly repayments to pay down the principal as fast as possible. This in turn reduces the amount of interest paid overall and shortens the length of the loan.

Another option may be to increase the frequency of your payments to fortnightly or weekly, rather than monthly, which may then reduce the amount of interest you are charged, depending on how your lender calculates repayments.

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

What is the difference between fixed, variable and split rates?

Fixed rate

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.