What Is Refinancing?
Refinancing simply means replacing your existing home loan with a new one. You can refinance with your current lender — known as a product switch — or move to an entirely different lender for better terms. Either way, the new loan pays out the old one, and you continue making repayments under the new arrangement.
The motivation varies from borrower to borrower. Some refinance purely to reduce their ongoing repayments. Others want to access the equity they've built in their property, consolidate high-interest debts, or switch from a fixed rate to a variable rate (or vice versa). Some simply want better loan features — like an offset account — that their current loan doesn't offer.
💡 The Loyalty Tax Is Real
Australian banks have a well-documented practice of offering their best deals to new customers, not loyal existing ones. If you haven't reviewed your home loan in the past two years, there's a strong chance you're paying more than you need to. A quick review with a mortgage broker costs you nothing and could identify significant savings.
5 Signs It's Time to Refinance
You don't need to wait until your fixed rate expires or until you're in financial trouble to consider refinancing. Here are the five most common signals that it's worth exploring your options:
1. Your Fixed Rate Period Is Ending
When a fixed rate loan expires, borrowers roll onto their lender's standard variable rate — which is often significantly higher than competitive market options. This is one of the most predictable and impactful moments to act. Ideally, start comparing options three to six months before your fixed term ends so you're prepared and won't face a gap period.
2. Your Financial Position Has Improved
If your income has grown, your credit history has improved, or your property has increased in value since you took out your loan, you may now qualify for better terms than when you originally borrowed. Lenders assess risk at the time of application — and your risk profile today may be considerably lower than it was when you first bought.
3. You're Paying Lenders Mortgage Insurance on Your Current Loan
If you originally borrowed with less than 20% deposit and paid LMI, your property may now have appreciated to the point where your LVR is below 80%. Refinancing in this scenario eliminates LMI from your new loan and may unlock far more competitive products.
4. You Want to Access Equity
If your property value has risen and you've been paying down your loan, you may have accumulated significant equity. Refinancing is often the most practical way to access that equity — for renovations, an investment property deposit, or other financial goals.
5. Your Loan No Longer Fits Your Life
Circumstances change. You may have moved from PAYG employment to self-employment, welcomed children into the family, or separated from a partner. Any significant life change is worth reviewing your home loan in the context of, as your needs — and what's available to you — may have shifted considerably.
The Step-by-Step Refinancing Process
The refinancing process is more streamlined than most people expect, particularly when you work with a mortgage broker who manages the moving parts. Here's what to expect:
Define Your Goal
Be clear on what you want to achieve. Lower repayments? Access equity? Debt consolidation? Better features? Your goal determines which lenders and products are most suitable — and it shapes every decision that follows.
Assess Your Equity Position
Calculate your current LVR: divide your outstanding loan balance by your property's current market value and multiply by 100. Aiming for 80% LVR or below gives you the widest lender options and avoids LMI.
Review Your Credit Profile
Your credit score affects both your approval chances and the deals available to you. You're entitled to a free credit report in Australia through agencies like Equifax and Experian. Check for any errors before applying.
Compare the Full Market — With a Broker
Rather than approaching lenders individually, a mortgage broker compares your options across 50+ lenders simultaneously. They'll identify not just the most competitive products, but the ones you're most likely to be approved for — avoiding unnecessary credit enquiries.
Calculate the True Savings
Factor in all refinancing costs — discharge fees, application fees, valuation fees, and any break costs if leaving a fixed rate early. A genuine saving is one that remains after all costs are accounted for. Your broker will calculate this break-even point for you.
Gather Your Documents
You'll typically need: last two payslips or tax returns, bank statements (3 months), your current home loan statement, council rates notice, and photo ID. Self-employed borrowers will also need their last two years of business financials.
Submit the Application
Your broker prepares and lodges the application with the chosen lender, manages any follow-up queries, and keeps you updated throughout the assessment process.
Valuation
The new lender will commission a property valuation — this is typically done as a desktop valuation or a drive-by, but may require a physical inspection for some properties or higher loan amounts.
Approval and Discharge
Once approved, your broker coordinates with both your old and new lenders to arrange settlement. Your existing loan is discharged (paid out) and the new loan draws down. The process is handled entirely — you don't need to manage the handover.
Set Up Your New Loan
Once settled, confirm your repayment schedule, set up your offset account if applicable, and configure any direct debits. A good broker stays in touch post-settlement and will continue monitoring your loan to flag future opportunities.
⏱ How Long Does Refinancing Take?
From initial enquiry to settlement, refinancing typically takes 2–4 weeks. Complex situations — self-employed borrowers, non-standard properties, or high LVRs — may take longer. Working with an experienced broker minimises delays by getting the application right the first time.
What Does Refinancing Cost?
Refinancing isn't free, but it is frequently very worthwhile. Understanding every cost upfront ensures you can accurately calculate whether the switch makes financial sense for your situation.
| Cost Item | Typical Range | Notes |
|---|---|---|
| Discharge Fee (existing lender) | $150 – $400 | Charged by your current lender to close the loan |
| Break Costs (fixed rate only) | $0 – $10,000+ | Varies significantly — calculated by your lender based on market conditions |
| Application / Establishment Fee | $0 – $700 | Many lenders waive this for refinancers |
| Valuation Fee | $200 – $600 | Often waived or covered by new lender |
| Legal / Mortgage Registration | $200 – $400 | Government registration of the new mortgage |
| LMI (if LVR exceeds 80%) | Thousands | Avoidable with 20%+ equity — a key consideration |
| Typical Total | $600 – $2,000 | Excluding break costs and LMI |
✅ Cashback Offers Can Offset Costs
Some lenders offer cashback incentives to attract refinancers — these can range from a few hundred to a few thousand dollars. While cashback shouldn't be the primary reason to choose a lender, it can meaningfully offset your switching costs. Your broker will identify any cashback offers available to you.
How Much Equity Do You Need?
Your Loan-to-Value Ratio (LVR) is calculated by dividing your current loan balance by your property's current market value and multiplying by 100. An LVR of 80% or below is the key threshold for most standard refinancing.
For example: if your home is worth $800,000 and your outstanding loan balance is $560,000, your LVR is 70% — well below the 80% threshold. You have $240,000 in equity, and refinancing opens up the full range of competitive lenders and products.
If your LVR is above 80%, refinancing is still possible but LMI will typically apply. In some cases — particularly where property values have risen significantly — it's worth waiting until your LVR naturally drops below 80% before refinancing.
When Refinancing Doesn't Make Sense
Refinancing isn't always the right move. Here are situations where it may not stack up:
- You're mid-way through a fixed rate with high break costs. Sometimes the break fee exceeds any potential saving for years. Always calculate the break-even point.
- You're close to paying off your loan. If you have only a few years left, the upfront costs may not be recovered in time.
- Your LVR is above 90%. LMI costs can be significant, and lenders have limited appetite for high-LVR refinancing.
- Your credit history has deteriorated. If you've missed payments or have defaults since taking out your original loan, refinancing to a better deal may not be achievable — though specialist lenders may still help.
Why Use a Mortgage Broker to Refinance?
Going directly to your bank — or even just one new lender — gives you a single point of comparison. A mortgage broker gives you access to dozens of lenders simultaneously, without the need to submit multiple applications or harm your credit file with unnecessary enquiries.
Beyond access, an experienced broker brings two critical advantages to refinancing:
- Pre-assessment: A good broker will assess your application before submitting it, identifying any potential issues and addressing them before they become reasons for decline.
- Ongoing monitoring: The best broker relationships don't end at settlement. Your broker should be monitoring your loan periodically and alerting you when a significantly better option becomes available.
And critically — using a broker is free to you. Brokers are paid by the lender after settlement, so you receive expert guidance, full market comparison, and end-to-end management at no cost.
📋 Documents You'll Need to Refinance
- Last two payslips (PAYG) or two years of tax returns (self-employed)
- Three months of bank statements
- Your current home loan statement
- Council rates notice (to confirm property address)
- Photo ID (passport or driver's licence)
- Details of any other debts or liabilities