Home Loan Refinance Guide (Australia): how to refinance & compare options
This home loan refinance guide explains how refinancing works, the key refinance options to consider (rate, offset, fixed vs variable, debt consolidation and equity release), the real costs to include in your break-even test, and a practical step-by-step process you can follow.
If you want help comparing lenders properly, Rate Challenge can run a clear “stay vs switch” review across 35+ lenders, include fees/cashbacks/break costs, and package a clean application designed to pass credit first time.
Updated 3 February 2026 • Applies to home loan refinancing in Australia
General information only — not credit, financial, tax or legal advice. Refinancing and home loans are assessed under responsible lending obligations. Final rates, fees and approval depend on a full application and lender assessment.
The refinance decision in one page
- Refinancing replaces your current home loan with a new loan (with your current lender or a new lender). It can reduce interest, improve features (like an offset), or restructure your loan for the next stage.
- Start with the numbers: estimate savings, add all costs, and check your break-even period. If you’ll likely keep the loan for less than that period, refinancing may not be worth it.
- Under ~80% LVR is often the easiest tier for sharper rates and approvals. Above that, LMI and tighter policy can change the maths.
- Fixed rate? Check break costs and timing before doing anything else. Break costs can outweigh savings if you refinance too early.
- A new lender re-assesses you (income, expenses, debts, credit history). Approval isn’t automatic even if you’ve paid your loan perfectly so far.
- Don’t refinance just to stretch the term. Lower repayments can be helpful, but resetting to a new 30-year term can increase total interest unless you keep paying extra.
Quick next step: run a fast sense-check with our home loan interest rate review calculator, then compare a “stay (repricing) vs switch (refinance)” scenario before you commit to an application.
How home loan refinancing works
In simple terms, refinancing means your existing home loan is paid out and replaced with a new loan. The new loan might be with your current bank (sometimes called a “switch” or “internal refinance”), or it might be with a different lender.
| Option | What it is | When it can make sense | Watch-outs |
|---|---|---|---|
| Rate review / repricing | You ask your current lender to reduce your rate (retention pricing) without changing lenders. | You want a quick win, your loan structure is otherwise fine, or switching costs are high. | Sometimes you’ll get a small drop but still remain uncompetitive on true cost (rate + fees + features). |
| Full refinance (new lender) | You move to a different lender for a new rate, product and policy settings. | You want a bigger pricing improvement, a better offset/feature set, or a lender whose policy fits your situation. | New assessment and paperwork; fees and (if fixed) break costs; valuations can change your LVR tier. |
| Restructure without switching | Adjust splits, repayment type, or features with your existing lender where possible. | You need flexibility (offset/redraw) or want cleaner splits, but don’t need to change lenders yet. | Not all lenders allow meaningful changes without reassessment; pricing improvements can be limited. |
If you want a neutral overview of refinancing, ASIC’s Moneysmart has a plain-English explainer. Read the Moneysmart refinancing overview.
Home loan refinance options: what you can change
Most people think refinancing is only about a lower rate. In practice, there are several “refinance options” you can combine. The right mix depends on your goal (cash flow, speed to pay off the loan, flexibility, or equity access).
| Refinance option | Usually suits | Why it helps | Trade-offs to check |
|---|---|---|---|
| Lower rate (same structure) | Borrowers happy with their loan features | Reduces interest and repayments (or lets you pay the loan off faster at the same repayment) | Fees, cashbacks and the break-even period |
| Offset account upgrade | People with savings buffers | An offset can reduce interest while keeping funds accessible | Package fees; “basic loan” alternatives; offset discipline |
| Fixed vs variable change | Borrowers who want certainty or flexibility | Fixing can help budget certainty; variable can help flexibility and extra repayments | Break costs; fixed features are often limited; rate changes over time |
| Split loan (part fixed, part variable) | Borrowers wanting a balance | Certainty on one portion, flexibility on the other | Complexity; ensuring offsets/redraw work as expected |
| Cash-out / equity release | Renovations, investing, or planned debt reduction | Access usable equity (subject to LVR, policy and servicing) | Risk of “debt creep”; documentation; higher repayments |
| Debt consolidation | Borrowers with high-interest debts | Can lower monthly outgoings by replacing expensive debts with a home-loan rate | Total interest can rise if you stretch short-term debt over 20–30 years |
Looking for “home loan refinance options”? You’re in the right place. The table above covers the main option types, and the sections below walk you through costs, break-even and the refinance process. If you want help comparing live lender options for your situation, use the form above.
Refinance break-even calculator (indicative)
Refinancing is worth considering when the net savings (after fees) outweigh the costs over the time you expect to keep the loan. This calculator is a simplified illustration that assumes principal & interest repayments.
Results
Enter your numbers to see indicative repayment changes, total interest and an estimated break-even period.
Indicative modelling only — doesn’t include every lender fee, offset balances, tax treatment, or product variation. Use this as a discussion starter, not a final decision tool.
Want the “stay vs switch” comparison done properly?
We’ll test your scenario across 35+ lenders, include fees/cashbacks and policy fit, and show whether refinancing is likely to put you ahead.
Refinance costs in Australia (what to include)
Refinancing can be cheap or it can be expensive — it depends on your lender, your state, whether you’re fixed, and whether LMI applies. A “lower rate” isn’t a win if fees and break costs erase the savings.
| Cost item | What it usually covers | When it matters most | Practical note |
|---|---|---|---|
| Discharge / settlement fees | Closing out your existing mortgage and admin/settlement steps | Almost every refinance | Often modest, but always include it in your break-even. |
| Government registration fees | Registering the new mortgage (and sometimes releasing the old one) | Every refinance | Fees vary by state and can change; your broker/solicitor will confirm at settlement. |
| Application / package fees | Upfront lender fees and/or annual package fees | When comparing “basic” vs “package” loans | Package loans can be worth it if the offset and pricing benefits outweigh the fee. |
| Valuation | Lender valuation to confirm property value and LVR | When you’re near an LVR tier boundary (e.g., around 80%) | A valuation can move you into a better (or worse) pricing tier. |
| Fixed-rate break costs | Cost to exit or vary a fixed-rate loan before expiry | If you refinance before a fixed term ends | Break costs can be significant — check this early before making a plan. |
| LMI (if applicable) | Lenders mortgage insurance premium | When refinancing above 80% LVR (and LMI can’t be transferred) | LMI can change the maths; sometimes repricing is smarter until LVR improves. |
Cashback offers: helpful, but not “free money”
Some lenders offer cashback incentives to win refinances. These can improve break-even, but they often come with conditions (timing, minimum loan size, repayment type, or a clawback if you refinance again quickly). Always compare the total cost, not just the cashback headline.
How to refinance a home loan: step-by-step
Here’s a practical refinance process that works for most owner-occupiers and investors. Complex scenarios (cash-out, multiple properties, self-employed, unusual property types) can add steps — but the framework stays the same.
Clarify the goal
Lower repayments, pay off faster, upgrade features, consolidate debt, or access equity. The goal drives the structure.
Sense-check the maths
Estimate savings, add costs, and check break-even. Include fees, cashbacks and any fixed break costs.
Compare “stay vs switch”
Test a repricing with your current lender against refinancing to a new lender with better policy/features.
Get documents ready
ID, income evidence, bank statements, existing loan details, and (if investing) rental statements and leases.
Submit one clean application
A well-packaged application reduces delays and avoids multiple enquiries across different lenders.
Valuation + approval
The lender confirms value (LVR tier), verifies documents and issues conditional then formal approval.
Discharge + settlement
The old loan is paid out, the new loan starts, and offsets/direct debits are set up to avoid missed payments.
How long does a refinance take?
Timeframes vary by lender and complexity. As a rough guide, a straightforward refinance can settle in a few weeks once documents are provided, while more complex deals can take longer. The two common time sinks are (1) collecting documents and (2) your current lender’s discharge process.
Refinance documents checklist
Requirements vary by lender, but most refinances ask for a similar baseline set of documents. Having these ready speeds up the process and reduces back-and-forth.
| Category | Common documents | Notes |
|---|---|---|
| Identification | Driver’s licence, passport (as required), proof of address | Lenders have verification standards; your broker will confirm what’s needed. |
| Income | Payslips, employment letter, tax returns/NOA, accountant letters (if self-employed) | Bonus, overtime and allowances often have specific assessment rules. |
| Banking | Transaction account statements, savings statements, liabilities statements | Used to verify living expenses and debt commitments. |
| Existing loan | Home loan statements, fixed expiry (if relevant), offset/redraw details | Helps confirm balances, repayments and features you may want to keep. |
| Property | Rates notice, insurance (if required), lease/rental statement (investors) | For cash-out, you may need quotes or a clear purpose statement. |
Tip: If you’re refinancing around a fixed expiry date, start early. That gives time to compare options, request break cost estimates (if needed) and avoid being forced onto an uncompetitive revert rate.
Equity, LVR and cash-out when refinancing
Your LVR (loan-to-value ratio) is one of the biggest drivers of refinance pricing and approval. It’s your loan amount divided by the property’s value. Many lenders price most keenly at lower LVR tiers (often at or below 80%).
| Scenario | Typical approach | Why it matters | What to watch |
|---|---|---|---|
| Refinance with plenty of equity | Target an LVR tier that avoids LMI and improves pricing | Better pricing and simpler approvals | Valuation risk can move you between tiers |
| Refinance near 80% LVR | Model both outcomes (just under vs just over) | Small valuation changes can affect LMI and rate tiers | Consider paying down a small amount to land in a better tier |
| Cash-out for renovations | Keep cash-out purpose clear and documented | Lenders often scrutinise cash-out more closely | Keep buffers for cost overruns and timeline changes |
| Debt consolidation | Consolidate only with a payoff plan | Can reduce monthly outgoings | Don’t stretch short-term debt across a 30-year mortgage without a strategy |
Investor note: If you refinance investment debt or split loans, tax deductibility can be affected by how funds are used and documented. Talk to your accountant before restructuring.
Serviceability & credit checks: what a new lender will reassess
Even if you’ve never missed a repayment, a new lender must reassess your application under their policy. This usually includes:
- Income assessment: base income plus any rules around overtime, bonuses, commissions or self-employed income.
- Existing liabilities: credit cards, personal loans, car loans, HECS/HELP (where applicable), and any other mortgages.
- Living expenses: lenders compare your stated expenses against benchmark models and your bank statements.
- Buffering/stress testing: lenders typically test repayments at a higher rate than the actual rate to ensure you can handle rate rises.
- Credit history: repayment conduct, enquiries, defaults (if any), and overall profile.
Will refinancing affect my credit score?
A refinance application can involve a credit enquiry. A single, well-planned enquiry is usually very different to multiple scattered applications. It’s one reason brokers typically aim to shortlist lenders first, then submit one clean application rather than “spraying and praying”.
Common refinance mistakes (and how to avoid them)
Chasing the lowest headline rate
Compare total cost (rate + fees) and the value of features like offset and redraw.
Resetting to a fresh 30-year term
Lower repayments can help, but “term creep” can increase total interest unless you keep paying extra.
Ignoring fixed break costs
If you’re fixed, estimate break costs early. The timing can completely change the best strategy.
Multiple applications with multiple lenders
Shortlist lenders first, then lodge one well-packaged application.
Cash-out without a plan
Equity release and consolidation are tools — but they need a clear purpose and repayment strategy.
Not planning settlement logistics
Offsets, salary crediting and direct debits need to be re-set to avoid missed payments after settlement.
Worked refinance examples (indicative only)
These examples are simplified to show how the thinking works. Real outcomes depend on your rate type, offset balance, repayment behaviour, fees, lender policy and your personal situation.
Owner-occupier: rate reduction + keep term
Borrower keeps a similar remaining term and focuses on lower total interest and cleaner features (offset). Costs are included in break-even.
Fixed expiry: plan early to avoid revert rate
Borrower starts comparisons before the fixed term ends, checks break costs (if any), and lines up options so they aren’t forced onto an uncompetitive variable rate.
Debt consolidation: lower cash flow, disciplined payoff
Consolidation reduces monthly outgoings, but borrower sets a clear strategy to pay down the consolidated amount quickly (so it doesn’t become a 30-year debt).
If you want your own numbers modelled, use the calculator above for a quick estimate, then speak to us for a side-by-side comparison with real lender options and policy notes.
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Home loan refinance FAQs
💡How do I know if refinancing will actually save me money?
Compare your current loan against realistic alternatives and include all costs (fees, any break costs, and any package fees). Then check your break-even: how long it takes for monthly savings to repay switching costs. If you won’t keep the loan longer than that, refinancing may not be worth it on dollars alone.
⏱️How long does a refinance take in Australia?
It depends on lender turnaround times, valuation timing, how quickly documents are provided and your current lender’s discharge process. Straightforward refinances can be relatively quick once documents are in, while complex scenarios (cash-out, multiple properties, self-employed) can take longer.
🏦Can I refinance with the same lender?
Sometimes you can (internal refinance or product switch), but often the first step is a repricing/rate review. If your lender can’t match a competitive offer or your loan structure needs a change they won’t support, switching lenders may be the better option.
🔒What if I’m on a fixed rate?
If you refinance before the fixed term ends, break costs may apply and can be significant. Start by estimating break costs and comparing “wait until expiry” versus “move sooner” scenarios. Planning early can also help you avoid reverting onto an uncompetitive variable rate.
💳Does refinancing affect my credit score?
A refinance application can involve a credit enquiry. A single, well-prepared enquiry is typically different to multiple applications. Shortlisting lenders first helps reduce unnecessary enquiries and avoids making the process harder than it needs to be.
🏠Can I refinance and access equity?
Often yes, subject to valuation, LVR limits, lender policy and serviceability. Lenders usually want a clear purpose for cash-out (renovations, investing, debt consolidation) and may request supporting documents like quotes or statements.
📉Is it better to negotiate or switch lenders?
Many borrowers do both: request a repricing from their current lender, then compare it against one or two refinance options. The best choice depends on net savings after costs, policy fit, features, and how long you expect to keep the loan.
🧮What are the main refinance fees?
Common costs include discharge/settlement fees from your current lender, government registration fees, and application or package fees from the new lender. Fixed break costs and LMI (if applicable) are the bigger “swing factors” that can change whether refinancing is worthwhile.
📆Will refinancing reset my loan term back to 30 years?
It can, but it doesn’t have to. Many borrowers choose a term similar to their current remaining term so refinancing focuses on reducing interest, not stretching the debt. If you do reset the term for cash-flow reasons, consider keeping repayments above the minimum if your budget allows.
🧾What documents do I need for a refinance?
Most lenders ask for ID, income evidence (payslips or tax returns), bank statements, existing loan statements, and property/rates details. Investors may need lease and rental statements. Your broker can provide a tailored checklist based on your scenario.
Information is general and current as at 3 February 2026. Lender policies, pricing and fees change — confirm details before acting.
Disclaimer
This guide is general information only. It doesn’t take your objectives, financial situation or needs into account. Please obtain independent credit, financial, tax and legal advice before acting or changing your home loan. Any refinance or loan outcome depends on lender assessment, responsible lending requirements and your individual circumstances.