In our refinance home loans guide:
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Summerland Bank - Eco Home Loan | |
---|---|
Variable interest rate | From 5.84% p.a. |
Comparison rate^ | 5.89% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 80% |
Northern Inland CU - Dream Home Loan | |
Variable interest rate | From 5.84% p.a. |
Comparison rate^ | 6.00% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 80% |
Pacific Mortgage Group - Owner Occupied | |
Variable interest rate | From 5.89% p.a. |
Comparison rate^ | 5.89% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 80% |
Reduce Home Loans - Basic Owner Occupied | |
Variable interest rate | From 5.89% p.a. |
Comparison rate^ | 5.91% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 80% |
Hume Bank - LiteBlue Owner Occupied | |
Variable interest rate | From 5.94% p.a. |
Comparison rate^ | 5.95% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 60% |
Tiimely Home - Livein Owner Occupied | |
Variable interest rate | From 5.94% p.a. |
Comparison rate^ | 5.95% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 90% |
Community First Bank - Basic Home Loan | |
Variable interest rate | From 5.94% p.a. |
Comparison rate^ | 5.99% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 95% |
Summerland Bank - Eco Home Loan Special | |
Variable interest rate | From 5.94% p.a. |
Comparison rate^ | 5.99% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 60-80% |
Qudos Bank - No Frills Home Loan | |
Variable interest rate | From 6.04% p.a. |
Comparison rate^ | 6.04% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 70% |
Loans.com.au - Basic Home Loan | |
Variable interest rate | From 6.04% p.a. |
Comparison rate^ | 6.06% p.a. |
Features |
|
Maximum loan to value ratio (LVR) | 90% |
Variable interest rate | Comparison rate^ | Features | Maximum loan to value ratio (LVR) | |
---|---|---|---|---|
Summerland Bank - Eco Home Loan | From 5.84% p.a. | 5.89% p.a. |
| 80% |
Northern Inland CU - Dream Home Loan | From 5.84% p.a. | 6.00% p.a. |
| 80% |
Pacific Mortgage Group - Owner Occupied | From 5.89% p.a. | 5.89% p.a. |
| 80% |
Reduce Home Loans - Basic Owner Occupied | From 5.89% p.a. | 5.91% p.a. |
| 80% |
Hume Bank - LiteBlue Owner Occupied | From 5.94% p.a. | 5.95% p.a. |
| 60% |
Tiimely Home - Livein Owner Occupied | From 5.94% p.a. | 5.95% p.a. |
| 90% |
Community First Bank - Basic Home Loan | From 5.94% p.a. | 5.99% p.a. |
| 95% |
Summerland Bank - Eco Home Loan Special | From 5.94% p.a. | 5.99% p.a. |
| 60-80% |
Qudos Bank - No Frills Home Loan | From 6.04% p.a. | 6.04% p.a. |
| 70% |
Loans.com.au - Basic Home Loan | From 6.04% p.a. | 6.06% p.a. |
| 90% |
Australian Mutual Bank - Owner Occupied Fixed | |
---|---|
Interest rate | From 5.48% p.a. for 3 years |
Comparison rate^ | 6.24% p.a. |
Features |
|
Maximum loan to value ratio | 95% |
Australian Mutual Bank - Owner Occupied Fixed | |
Interest rate | From 5.63% p.a. for 5 years |
Comparison rate^ | 6.16% p.a. |
Features |
|
Maximum loan to value ratio | 95% |
Illawarra Credit Union - The Works Package Home Loan Fixed | |
Interest rate | From 5.79% p.a. for 3 years |
Comparison rate^ | 6.91% p.a. |
Features |
|
Maximum loan to value ratio | 95% |
Arab Bank Australia - Owner Occupied Fixed | |
Interest rate | From 5.85% p.a. for 1 years |
Comparison rate^ | 7.63% p.a. |
Features |
|
Maximum loan to value ratio | 60-70% |
BCU Bank - Owner Occupied Fixed | |
Interest rate | From 5.89% p.a. for 3 years |
Comparison rate^ | 6.18% p.a. |
Features |
|
Maximum loan to value ratio | 95% |
Qudos Bank - Owner Occupied | |
Interest rate | From 5.94% p.a. for 3 years |
Comparison rate^ | 6.23% p.a. |
Features |
|
Maximum loan to value ratio | 80% |
Horizon Bank - Rate Home Loan Owner Occupied Fixed | |
Interest rate | From 5.94% p.a. for 3 years |
Comparison rate^ | 6.42% p.a. |
Features |
|
Maximum loan to value ratio | 70% |
BCU Bank - Owner Occupied Fixed | |
Interest rate | From 5.99% p.a. for 5 years |
Comparison rate^ | 6.17% p.a. |
Features |
|
Maximum loan to value ratio | 95% |
IMB - Owner Occupied Fixed | |
Interest rate | From 5.99% p.a. for 3 years |
Comparison rate^ | 6.32% p.a. |
Features |
|
Maximum loan to value ratio | 80% |
Heritage Bank - Home Advantage Fixed | |
Interest rate | From 5.99% p.a. for 5 years |
Comparison rate^ | 6.42% p.a. |
Features |
|
Maximum loan to value ratio | 95% |
Interest rate | Comparison rate^ | Features | Maximum loan to value ratio | |
---|---|---|---|---|
Australian Mutual Bank - Owner Occupied Fixed | From 5.48% p.a. for 3 years | 6.24% p.a. |
| 95% |
Australian Mutual Bank - Owner Occupied Fixed | From 5.63% p.a. for 5 years | 6.16% p.a. |
| 95% |
Illawarra Credit Union - The Works Package Home Loan Fixed | From 5.79% p.a. for 3 years | 6.91% p.a. |
| 95% |
Arab Bank Australia - Owner Occupied Fixed | From 5.85% p.a. for 1 years | 7.63% p.a. |
| 60-70% |
BCU Bank - Owner Occupied Fixed | From 5.89% p.a. for 3 years | 6.18% p.a. |
| 95% |
Qudos Bank - Owner Occupied | From 5.94% p.a. for 3 years | 6.23% p.a. |
| 80% |
Horizon Bank - Rate Home Loan Owner Occupied Fixed | From 5.94% p.a. for 3 years | 6.42% p.a. |
| 70% |
BCU Bank - Owner Occupied Fixed | From 5.99% p.a. for 5 years | 6.17% p.a. |
| 95% |
IMB - Owner Occupied Fixed | From 5.99% p.a. for 3 years | 6.32% p.a. |
| 80% |
Heritage Bank - Home Advantage Fixed | From 5.99% p.a. for 5 years | 6.42% p.a. |
| 95% |
“Don't be afraid of the smaller lenders as they can be the most innovative and competitive. The risk appetite of lenders and their offers change regularly – sometimes monthly – so it’s worth checking the market often to see what’s available. A mortgage broker can check all the lenders on their panel for you at once to see who can offer you the best deal.”
Mansour Soltani, Money.com.au's home loan expert
Refinancing a home loan means switching from your current loan to a new one, either with the same lender or a different provider. When you refinance, your current home loan is closed and the balance is moved across to the new loan for you to continue repaying it.
Ideally you’ll refinance to a home loan offering better terms (interest rate, fees, features), meaning your repayments could be lower with the new loan.
Alternatively, you may also be able refinance to a higher loan amount (if you need to borrow more), or move to a loan with a shorter term to save on interest.
In either of these cases, your repayments will likely be higher after the refinance.
“Borrowers should get into the habit of reviewing their home loan pricing every 12 months and refinancing every couple of years,” our home loans expert and mortgage broker, Mansour Soltani, says.
Existing home loan | Refinance home loan | |
---|---|---|
Remaining home loan balance | $600,000 | $600,000 |
Interest rate | 6.5% | 5.5% |
Minimum fortnightly repayment | $1,869 | $1,700 |
Total interest saving over remaining loan term | n/a | $109,944 |
Save on interest and fees
Borrow more if you need it
Access better home loan features
Reorganise your finances based on your current needs
Break costs (on old loan)
Applications fees (on new loan)
Requires a full new application
Can impact your credit score in short term
“A lot of people don't realise that refinancing a home loan involves an application, like the one you did when you purchased your home and got the loan originally. It's the same amount of work really. The only thing that's missing is a contract of sale for the property. But the upside of refinancing can massively outweigh the effort.” - Mansour Soltani, home loans expert.
Mansour Soltani, Money.com.au's home loan expert
As an established borrower, lenders are eager for your business and may offer you better deals. This can mean lower interest rates and lower fees, better loan features and more flexibility.
If you’ve built up equity in your property, refinancing could allow you to borrow more against that equity for purposes like renovating, buying an investment property or investing in shares.
If you can afford higher repayments, refinancing to a shorter loan term will mean big interest savings.
You may decide it’s time to move to a fixed rate or from fixed to variable. Or from principal and interest repayments to interest only (or vice versa).
If your fixed rate is coming to an end and you don’t want to be automatically rolled onto your lender’s standard variable rate, you’ll need to refinance.
For example, you may need to refinance if one spouse or partner is buying out the other’s share in a home.
Refinancing your home loan could enable you to roll other debts into your mortgage (i.e. increase your home loan size). This would mean a potentially lower rate on those debts but likely over a longer loan term.
Some people simply refinance because they have had a poor experience with their current lender and want to vote with their feet.
The actual process of refinancing is very similar to taking out a first-home buyer home loan to buy a property initially. But here are some steps that could help you to get the best deal possible as w refinancer specifically.
“Particularly if it's a high loan amount, lenders want to hold that loan on their books, Mansour explains.
"So they'll typically come back with a better rate, and then we have a look at the market to see what’s available compared to that offer.
“The reality is, a lot of the time your current lender won’t match a lower rate from another provider. Because of how banks fund loans, new loans are typically cheaper to fund than existing loans. But what they might do is try to make the difference between their rate and the competitor’s so small that you decide refinancing isn’t worth it.”
When you’re buying a property, the mantra is ‘location, location, location’. But when you’re refinancing your home loan, that changes to ‘valuation, valuation, valuation’.
As part of the refinancing process, a lender will have your property valued. Mansour says he compares multiple lenders for his clients based on the valuation they will offer on the property. He calls this ‘shopping the val’.
The aim is getting the highest valuation possible. That can mean you are eligible to refinance at a lower interest rate on account of your lower loan-to-value ratio, or you can borrow more against your equity (a higher property valuation equals higher equity for the owner).
According to Mansour, the lender offering the lowest rates can often be more conservative when valuing properties. Hence the need to shop around.
Getting a lower interest rate on your home loan by refinancing will save you money. Sometimes a lot of money.
That’s assuming the other major aspects of the loan are the same. For example, if you refinance from a loan with principal and interest repayments to an interest-only loan, the interest rates available may be higher. The same goes if you're refinancing a variable rate home loan to a fixed rate.
Looking at the comparison rate will give you an idea of the overall cost of the loan per year, including interest and fees.
The trade off with some of the lowest rate loans is they tend to be available on more basic home loans that are light on features.
Speaking of which…
Refinancing to a loan with better features could also save you a lot of money. For example:
“I often recommend a redraw to clients for an owner occupier and an offset for an investment property. Redraws are generally free and act in a very similar way to an offset,” according to Mansour.
Read more about the differences between offset and redraw.
If there are application fees for refinancing to a new lender, ask if these can be waived. In a lot of cases, they can be if the lender is keen to get the deal across the line or your broker has a strong relationship with the lender.
The home loan fees charged by your existing lender when you leave (discharge fees) are naturally harder to negotiate away.
Whatever you do, don’t let your loan term be inadvertently extended. Some lenders may default new customers (even those refinancing) onto a 30-year loan term. Ideally you want the same loan term, or even a shorter one if you can afford the higher repayments.
If you refinance to a lower rate, but keep your regular repayment at the same level as your old loan, your loan term should be shorter under the new loan.
While understandably you may be primarily motivated by getting the best deal you can right now, remember you are still signing up for a loan that may take decades to repay.
As well as getting the best refinance deal for now, consider:
Just because you were initially eligible for a home loan, it doesn’t mean you will automatically be approved to refinance. A new lender will still assess your home loan application thoroughly.
If your circumstances have changed (your income, other debts, credit score etc.), that will be taken into account. That said, having a record of consistently repaying your previous home loan will likely count in your favour.
For example, some borrowers who originally had to take out a bad credit home loan or a low doc home loan later refinance to a better rate once their credit has improved.
The valuation of your property matters a lot here too. If your property has dropped in value since you took out your loan initially, refinancing may be more difficult unless you have paid off a big chunk of the loan in the meantime.
In other words, your loan-to-value ratio will need to be below 80%, or you may need to pay for lender’s mortgage insurance (even if you also had to pay for it with your previous lender).
“The best thing you can do in the scenario is ask for a pricing review with your current lender, just don’t be surprised if the lender doesn’t ultimately offer you a discount,” Mansour explains.
You can usually apply for a refinance home loan online in a matter of minutes, but realistically it can take several weeks for the entire process from start to finish.
There’s no actual upper limit on how often you can refinance, but there are refinancing costs to consider and generally you’ll need to be on any particular loan for a while in order for the savings to offset the costs.
Remember too that refinancing involves a new application and credit enquiry that goes on your credit report. Refinancing very frequently could become a red flag for future lenders. Plus, what lender is going to want to sign up a borrower who is very unlikely to hang around for long?
If you can get a better or more suitable home loan deal by switching your loan, that is generally a good time to be considering a refinance. But here are some other common refinancing ‘triggers’:
You can generally fix your home loan for a period of one to five years. Compare interest rates on fixed rate home loans:
Home Loans guides and resources
What's the next step on your property journey? Our home loan guides will help you navigate the road ahead, whether you're buying, building or looking to save on an existing loan.