Showing home loans based on a loan of
$
with a deposit of
Advertised Rate

2.48%

Variable

Comparison Rate*

2.50%

Company
loans.com.au
Repayment

$1,343

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

3.41

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Advertised Rate

2.44%

Variable

Comparison Rate*

2.27%

Company
Homeloans.com.au
Repayment

$610

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

3.20

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Advertised Rate

2.54%

Variable

Comparison Rate*

2.37%

Company
Homeloans.com.au
Repayment

$635

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.96

/ 5
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Advertised Rate

2.14%

Variable

Comparison Rate*

2.17%

Company
Homestar Finance
Repayment

$1,292

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

4.09

/ 5
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Advertised Rate

2.59%

Variable

Comparison Rate*

2.42%

Company
Homeloans.com.au
Repayment

$648

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.83

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What is refinancing?

Refinancing or re-mortgaging a home loan refers to switching from one mortgage to another, often with a different bank or mortgage lender.

Learn more about home loans

Why should I refinance?

There are many different reasons to consider refinancing a home loan. Some of the most popular include:

  • To reduce your loan costs: Refinancing to a home loan with a lower interest rate may help make your home loan payments more affordable, and allow you to save money over the longer term. 
  • To enjoy more flexible features: Switching to a home loan that allows you to make extra repayments, or access redraw facilities or offset accounts may allow you to better manage your mortgage payments. This could help you to pay down your loan more quickly and save money over the longer term. 
  • To free up some equity: If you’ve paid off a chunk of your home loan, you may be able to use this equity to secure another loan, such as a line of credit. This could help you pay for renovations or other major projects. 
  • To consolidate debts: If you have outstanding personal loans or credit cards, you may be able to add these debts onto your mortgage to pay off over time. This can help you pay less interest in the short term, thanks to the generally lower interest rates of home loan, though paying these debts off over a longer term means you may pay more interest in total. 
  • To find a lender that treats you better: If you’re unhappy with your bank’s customer service, refinancing may let you switch to a lender that listens to you. As well as banks, there are a range of non-bank mortgage providers to choose from. This includes online-only lenders, which don’t have branches to visit, but can often offer lower interest rates. 
  • To take advantage of incentives: Some lenders offer special discounts and other benefits to new customers, from reduced interest rates to cashback deals. Refinancing to a new lender may let you enjoy these special benefits, though it’s important to compare the value they offer to the loan’s overall cost before making a decision.

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 the following:

  • Discharge fees (average $300): Covers the paperwork when you end a home loan, including when you switch to a new lender.
  • Upfront fees (average $570): Covers the admin cost of setting up your new home loan.
  • Valuation fee (varies): Covers the cost valuing the property as part of the mortgage application process.
  • Break fees (varies): If your current home loan is on a fixed interest rate, you may need to pay a fee to refinance from this arrangement.
  • 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 per cent of the property’s value. The less security you can provide, the more the LMI may cost.

Before you refinance, consider working out the total cost of switching mortgages, and estimate how long it may take for the savings on your new loan to make up the difference.

TIP:

Some lenders may offer to cover your discharge fees and/or forfeit their upfront fees to earn your business. It could be worth negotiating your fees before signing a loan contract.

How long does it take to refinance?

The refinancing process 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 you 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.

What do I 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 e.g. passport, driver’s licence etc.: To confirm your identity and residence
  • Details of any other assets (e.g. cars, boats, other valuables) or liabilities (e.g. personal loans, car loans, credit cards): To provide a clear picture of your financial status.
  • Bank statements: To confirm your income and regular living expenses

TIP:

When you tell your current lender you have found a new loan with a better rate and/or better fees, your current lender may try to persuade you to stay.

 

Before you start planning to refinance, you may want to speak to your current lender about their flexibility on rates or fees, and see if they’re willing to negotiate to keep your business.

What are the steps of refinancing?

  1. Define your refinance goal: Do you want to reduce your monthly repayments? Pay off your loan quicker? Get cash out of the property? Consolidate debts? 
  2. Find your current loan’s details: This includes your current interest rate, outstanding mortgage balance, and monthly repayment, as well as the current value of your property and the discharge fee on your current loan.
  3. Compare alternative home loans: Compare interest rates, fees, features and benefits, and consider which loan options may be able to help you achieve your goals. If you need help, you can use a comparison website, or contact a mortgage broker. 
  4. Work out your switch cost: Check what fees and charges you’ll need to pay to exit your current loan and switch to a new one. You could also try to find out if a new lender would be willing to cover your discharge fee and/or forfeit its upfront fee to earn your business.
  5. Calculate break-even point: Work out how much you could save per month by switching to a cheaper home loan, then work out how long it would take for these savings to make up the switch costs.
  6. Make your decision: Based on the information at hand, decide if you still want to switch lenders, and which mortgage you’d like to choose.
  7. Apply: Contact your new prospective lender and start the application process.
  8. Get your valuation: Most lenders require a valuation as part of the mortgage application process, including when you’re refinancing, to confirm how much money they can safely lend you. These valuations may be conducted online, based on information about the local area, property size and condition, while sometimes a valuer will come out to physically inspect the property.
  9. Receive your approval or rejection from the lender.
  10. Transfer and settle your loan.

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.

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 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 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 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.

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.  

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.

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. 

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.

What is a secured home loan?

When the lender creates a mortgage on your property, they’re offering you a secured home loan. It means you’re offering the property as security to the lender who holds this security against the risk of default or any delays in home loan repayments. Suppose you’re unable to repay the loan. In this case, the lender can take ownership of your property and sell it to recover any outstanding funds you owe. The lender retains this hold over your property until you repay the entire loan amount.

If you take out a secured home loan, you may be charged a lower interest rate. The amount you can borrow depends on the property’s value and the deposit you can pay upfront. Generally, lenders allow you to borrow between 80 per cent and 90 per cent of the property value as the loan. Often, you’ll need Lenders Mortgage Insurance (LMI) if the deposit is less than 20 per cent of the property value. Lenders will also do a property valuation to ensure you’re borrowing enough to cover the purchase. 

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.