Pillar guide
Refinancing your home loan. How it works, and when it's worth it.
What refinancing actually involves, what it costs, how to tell whether your rate has drifted, and the situations where staying put is the better answer.
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The best rate your bank offers is rarely the one you're on.
Lenders compete hardest for new borrowers. The sharp rates go to people walking in the door; existing customers quietly move onto what the industry calls the back book.
It isn't a conspiracy, it's a pricing strategy that works because most people never check. Two or three years after settlement, the gap between your rate and the current offer can be substantial, and it compounds every month you don't look.
That said, refinancing isn't automatically worth it. Break costs, a restarted loan term or a lender who simply matches the offer can all change the answer. The point is to know the number, not to switch reflexively.
How refinancing actually works
You apply to a new lender, they assess you as they would any borrower, and on approval they pay out your existing loan and take over the security. Your old lender discharges the mortgage; the new one registers theirs.
The practical work is document collection and coordination. Most of it is the broker's job rather than yours: a handful of forms and one settlement date.
When it's worth doing
Refinancing tends to make sense when the rate gap is meaningful and durable, when your loan structure no longer fits your life, or when you need to access equity for something specific.
- Your rate is materially above what your profile can currently command
- You're coming off a fixed rate onto an uncompetitive revert rate
- You need a proper offset and your current loan doesn't offer one
- You want to consolidate debt into a lower-rate facility, deliberately
- You want to release equity for a renovation or an investment purchase
When it isn't
If you're on a fixed rate with significant break costs, if your loan balance is small enough that the saving won't recover the switching costs, or if your circumstances have changed in ways that would make a new application difficult, staying put may be the right call.
There's also a structural trap: refinancing to a fresh 30-year term lowers repayments while increasing total interest. That can be the right choice for cashflow, but it should be a decision, not an accident.
What it costs to switch
Typically a discharge fee from the outgoing lender, government registration fees, and sometimes an application or valuation fee from the new lender. Cashback offers come and go and shouldn't drive the decision.
On a fixed-rate loan, break costs are the item that matters and can be large enough to make switching uneconomical until the fixed period ends.
Structure before rate
A slightly higher rate with a properly used offset frequently beats a sharper rate without one. Money sitting in an offset reduces the balance you're charged interest on, while remaining accessible, unlike extra repayments, which you may need to redraw.
A worked example
- Loan balance
- $620,000
- Current rate
- 6.55%
- Rate available on your profile
- 5.94%
- Current monthly repayment
- ~$4,070
- Repayment at the new rate
- ~$3,820
- Monthly difference
- ~$250
- Switching costs (typical, variable loan)
- ~$1,200
- Break-even
- ~5 months
Illustrative only, on a 27-year remaining term. Your actual rate depends on your LVR, credit profile and lender policy.
If you'd rather have someone work through this against your actual numbers, that conversation is free and there's no obligation attached to it.
RefinanceFrequently asked questions
It depends entirely on the gap between your current rate and what your profile can command. Our refinance calculator shows the monthly difference and the break-even on switching costs in about a minute.
A formal application creates a credit enquiry, which is visible on your file. A review or comparison doesn't. We only lodge an application once you've decided to proceed.
Commonly three to six weeks from application to settlement, depending on the lender's processing times and how quickly documents are provided.
Often worth doing, and it works better when you have a competing offer in hand. We'll tell you when that's the smarter play rather than switching.
Sometimes, but a new lender assesses you fresh. If your income has dropped or you've taken on debt since settlement, that's worth reviewing before you apply anywhere.
This guide is general information only and does not take into account your objectives, financial situation or needs. It is not credit, financial, legal or tax advice. Consider its appropriateness to your circumstances and seek professional advice where relevant. Credit criteria, fees, charges, terms and conditions apply.
Run the numbers
Refinance savings
What your current rate is costing you, your break-even on switching costs, and the five-year picture.
Offset account
What an offset balance actually saves you in interest, and the indicative term reduction.
Extra repayments
What paying a little more each month takes off your loan term and total interest.
Fixed vs variable
Model a rate scenario across a fixed period and see which structure costs less.
The process
How it works.
Tell us what you're trying to do
A quick conversation gives us the context: your goal, your timeline and where you're up to.
We assess your position
We look at your circumstances, objectives and the lending options actually available to you across the lenders we have access to.
We structure the strategy
We identify an appropriate lending approach, and explain the trade-offs in plain English before you commit.
We handle the process
From application through to settlement, we stay involved and keep you updated.
Free guide
The Fifteen Minute Refinance Review
What staying put is really costing you
- How to check your rate against what's actually available now
- The real cost of switching, and when it isn't worth it
- Structuring an offset properly instead of just chasing a rate
- Consolidating debt without quietly resetting the clock
Other guides
- First Home BuyersFirst home buyer loans in Australia. The plain-English guide.
- Property InvestmentInvestment property loans and structure. A plain-English guide.
- Complex Income & Premium Home FinanceHome finance for self-employed and complex-income borrowers.
- Business, Commercial & Asset FinanceBusiness and commercial finance. Funding growth without the cliff.
Ready when you are.
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