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.

Find and compare refinancing home loans

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2.59%

Fixed - 5 years

2.53%

UBank

$1.4k

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

2.42

/ 5
More details

3.03%

Variable

2.70%

UBank

$758

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

1.74

/ 5
More details

2.29%

Fixed - 3 years

2.74%

UBank

$1.3k

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

2.00

/ 5
More details

2.74%

Fixed - 5 years

2.83%

UBank

$1.4k

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

2.07

/ 5
More details

2.89%

Variable

2.89%

UBank

$1.4k

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

2.33

/ 5
More details

2.84%

Variable

2.44%

Athena Home Loans

$710

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

1.96

/ 5
More details

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 much information is required to get a rating?

You don’t need to input any information to see the default ratings. But the more you tell us, the more relevant the ratings will become to you. We take your personal privacy seriously. If you are concerned about inputting your information, please read our privacy policy.

What is breach of contract?

A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

Mortgage Calculator, Property Value

An estimate of how much your desired property is worth. 

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.

Mortgage Calculator, Repayments

The money you pay back to your lender at regular intervals. 

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

How will Real Time Ratings help me find a new home loan?

The home loan market is complex. With almost 4,000 different loans on offer, it’s becoming increasingly difficult to work out which loans work for you.

That’s where Real Time RatingsTM can help. Our system automatically filters out loans that don’t fit your requirements and ranks the remaining loans based on your individual loan requirements and preferences.

Best of all, the ratings are calculated in real time so you know you’re getting the most current information.

Mortgage Calculator, Interest Rate

The percentage of the loan amount you will be charged by your lender to borrow. 

How is the flexibility score calculated?

Points are awarded for different features. More important features get more points. The points are then added up and indexed into a score from 0 to 5.

Does each product always have the same rating?

No, the rating you see depends on a number of factors and can change as you tell us more about your loan profile and preferences. The reasons you may see a different rating:

  • Lenders have made changes. Our ratings show the relative competitiveness of all the products listed at a given time. As the listing change, so do the ratings.
  • You have updated you profile. If you increase your loan amount, the impact of different rates and fees will change which loans are the lowest cost for you.
  • You adjust your preferences. The more you search for flexible loan features, the more importance we assign to the Flexibility Score. You can also adjust your Flexibility Weighting yourself, which will recalculate the ratings with preference given to more flexible loans.

How can I get a home loan with no deposit?

Following the Global Financial Crisis, no-deposit loans, as they once used to be known, have largely been removed from the market. Now, if you wish to enter the market with no deposit, you will require a property of your own to secure a loan against or the assistance of a guarantor.

Why should you trust Real Time Ratings?

Real Time Ratings™ was conceived by a team of data experts who have been analysing trends and behaviour in the home loan market for more than a decade. It was designed purely to meet the evolving needs of home loan customers who wish to merge low cost with flexible features quickly. We believe it fills a glaring gap in the market by frequently re-rating loan products based on the changes lenders make daily.

Real Time Ratings™ is a new idea and will change over time to match the frequently-evolving demands of the market. Some things won’t change though – it will always rate all relevent products in our database and will not be influenced by advertising.

If you have any feedback about Real Time Ratings™, please get in touch.

What do mortgage brokers do?

Mortgage brokers are finance professionals who help borrowers organise home loans with lenders. As such, they act as middlemen between borrowers and lenders.

While bank staff recommend home loan products only from their own employer, brokers are independent, so they can recommend products from a range of institutions.

Brokers need to be accredited with a particular lender to be able to work with that lender. A typical broker will be accredited with anywhere from 10 to 30 lenders – the big four banks, as well as a range of smaller banks, credit unions and non-bank lenders.

As a general rule, brokers don’t charge consumers for their services; instead, they receive commissions from lenders whenever they place a borrower with that institution.

Mortgage Calculator, Deposit

The proportion you have already saved to go towards your home. 

Mortgage Balance

The amount you currently owe your mortgage lender. If you are not sure, enter your best estimate.

Mortgage Calculator, Repayment Type

Will you pay off the amount you borrowed + interest or just the interest for a period?

What is appraised value?

An estimation of a property’s value before beginning the mortgage approval process. An appraiser (or valuer) is an expert who estimates the value of a property. The lender generally selects the appraiser or valuer before sanctioning the loan.

What happens to your mortgage when you die?

There is no hard and fast answer to what will happen to your mortgage when you die as it is largely dependent on what you have set out in your mortgage agreement, your will (if you have one), other assets you may have and if you have insurance. If you have co-signed the mortgage with another person that person will become responsible for the remaining debt when you die.

If the mortgage is in your name only the house will be sold by the bank to cover the remaining debt and your nominated air will receive the remaining sum if there is a difference. If there is a turn in the market and the sale of your house won’t cover the remaining debt the case may go to court and the difference may have to be covered by the sale of other assets.  

If you have a life insurance policy your family may be able to use some of the lump sum payment from this to pay down the remaining mortgage debt. Alternatively, your lender may provide some form of mortgage protection that could assist your family in making repayments following your passing.

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.

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.