Refinancing
When should you refinance your home loan?
By Jared Mullane
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Best Refinance Home Loan Rates Comparison
Updated 8 May 2025
Compare refinance home loan rates from 4.94% p.a. (comparison rate^ 5.95% p.a.)
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Refinance home loans in 2025
Refinancing on the rise: Are homeowners getting ready for more rate cuts?
Sean Callery
Editor
More than half of Aussies refinanced their home loans last year, with a big jump in people switching loans with their current lender – up 15% in the final quarter. Refinancing with a new lender also picked up, rising 5%, showing growing confidence among borrowers. After the first interest rate cut in over three years back in February, we’re told that more rate cuts are on the way. If that happens, and lenders also ease the rules around who can qualify for a loan, we’re likely to see refinancing activity pick up.
Refinancing in Australia by the numbers
Total home loan refinances in the last 12 months
564,797
Internal refinances compared to a year ago
+14%
External refinances compared to a year ago
-24%
Average time before people refinance their home loan
5 years
Average loan amount for people switching banks
$594,815
Average property valuation price for refinancers
$1,203,503
What is refinancing?
Refinancing means switching your current home loan to a different lender (external financing) — usually to get a lower interest rate — or a different loan product or higher loan amount with your current lender (internal financing)
When you refinance to a home loan offering better terms (interest rate, fees, features), your repayments could be lower with the new loan. You can also refinance your home loan to get a better repayment structure or to access certain features your current mortgage doesn’t have, like an offset account or redraw facility.
Homeowners generally refinance their mortgage about five years after purchasing their property, according to PEXA’s Refinancing Mortgage Insights. The average amount for external home loan refinances is $594,815, while internal refinances average $536,866, according to the ABS.
The two types of home loan refinance
1. Dollar-for-dollar refinance
This is a straight swap, meaning your current home loan is closed, and your remaining balance is transferred to the new loan. In this instance, you’re not taking on extra debt and your repayments will be lower if you switch to a lower rate with the same loan term. If you opt for a shorter term, your repayments could be higher but you’ll save even more interest as the loan balance will fall faster.
2. Home loan top-up
You can also refinance your mortgage to access some of your home equity. This is done by increasing your existing home loan balance, known as a top-up or with a cash-out refinance (where your equity is paid as a lump sum). A home loan top-up can also include consolidating high-interest debts, such as credit cards and personal loans, into your mortgage, which typically has a lower interest rate. In either case, you’re increasing your debt, so your repayments will be higher after the refinance.
Peter Drennan, Money.com.au's Research & Data Expert
"Refinanced loans increased in the final quarter of 2024 for the first time that year. While the annual growth rate was still negative at -9%, this was an improvement from -12% in the previous quarter — indicating a possible trend reversal heading into 2025 (as shown in the graph above)."
Peter Drennan, Money.com.au's Research & Data Expert
How much could you save by refinancing your home loan?
Based on Money.com.au’s analysis, an average homeowner could save nearly $3,800 a year by refinancing to a lower rate. That's enough to cover a flight from Sydney to Bali for two people, plus a week's accommodation in Ubud – or two 13-inch Apple Macbooks.
That's based on the average external home loan refinance of around $600,000, switching from the average variable interest rate for existing loans (6.36% p.a. per the RBA’s Housing Lending Rates) to one of the lowest ongoing refinance variable rate on Money.com.au’s database is (5.64% p.a), with 25 years remaining on the loan.
Potential savings on a $600,000 home loan by refinancing to a lower rate
| Interest rate | 6.50% p.a. | 6.25% p.a. | 6.00% p.a. | 5.64% p.a. |
|---|---|---|---|---|
Monthly repayments | $4,051 | $3,958 | $3,865 | $3,735 |
Monthly savings | ❌ | $93 | $186 | $316 |
Yearly savings | ❌ | $1,116 | $2,232 | $3,792 |
Total interest paid over the loan term | $615,373 | $587,405 | $559,743 | $520,457 |
Total savings over the loan term | ❌ | $27,968 | $55,630 | $94,916 |
Despite the significant potential savings, our recent survey found that only 10% of mortgage holders plan to refinance in 2025. Almost half of respondents (45%) haven't decided if they'll refinance, while 25% said they would consider it if rates drop further (which is highly likely according to multiple banks and experts).
A word of caution…
Mansour Soltani, Money.com.au's Home Loans Expert
“When refinancing, many lenders will default you back onto a 30-year loan term, which cancels out any savings you might gain from a lower rate. In fact, you'll end up paying more interest overall as the longer loan term increases the total interest paid over time. 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.”
Mansour Soltani, Money.com.au's Home Loans Expert
How much will your repayments be if you refinance?
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Most common reasons to refinance a home loan
1. Get a better interest rate
According to Mansour, the most common reason borrowers refinance their mortgage is to get a lower interest rate. As an established borrower, lenders are eager for your business and may offer you lower interest rates and fees, with better loan features.
Right now, a competitive interest rate typically starts with a ‘5’ – but that could drop even further. The big four banks have released their forecasts for the rest of 2025 and into 2026, and more rate cuts are on the horizon:
- NAB is the most optimistic, predicting five cuts by February 2026, bringing the cash rate down to 2.60%.
- ANZ, CBA and Westpac expect three cuts in 2025, with the rate dropping to 3.35% by year’s end.
2. Borrow more by releasing equity
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 (i.e. using your equity as a deposit) or investing in shares. You can do this by increasing your existing home loan with a top-up or with a cash-out refinance.
3. Lock in a shorter loan term
Refinancing to a shorter loan term will mean big interest savings if you can afford higher repayments. For example, refinancing a $600,000 home loan at 6.00% p.a. from a 25-year term to a 24-year term would increase your monthly repayments by $70, but would save you $26,213 in interest over the life of the loan.
4. Switch to a different loan type
You can refinance your mortgage to switch to a fixed rate or change from a fixed to a variable rate. Or, from principal and interest repayments (P&I) to interest-only (or vice versa). Switching to a different loan product allows you to remain with your current lender if you’re satisfied with them (although it doesn't hurt to negotiate a lower interest rate while you’re at it).
5. Consolidating debt
Refinancing your home loan could allow 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 (meaning you could end up paying more interest over time).
6. Your fixed rate term is expiring
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. You have the option to switch to another fixed-rate home loan or opt for a variable rate (or a split between the two). It's important to note that refinancing before the end of your fixed period can result in break costs, so timing is crucial.
7. Restructuring finances following divorce/separation
If you’ve separated from a partner with whom you co-borrowed, you’ll generally need to refinance to buy out the other person’s share in the home. Most lenders won’t allow you to remove a joint applicant from the loan.
8. You’re not happy with your current lender
Some people simply refinance because they have had a poor experience with their current lender and want to vote with their feet. You’ll need to evaluate whether the benefits of switching outweigh the refinancing costs before deciding to refinance.
How to get the best deal when refinancing a home loan
The refinancing process is very similar to taking out a first-home buyer home loan to buy a property initially. But, there are some specific steps that could help you to get the best deal possible as a refinancer.
Ask your current lender for a better deal first
The average mortgage rate in Australia is higher for existing customers than those taking out a new loan, but there's no harm in asking your current lender if they can give you a discount.
“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, or they might try to make the difference between their rate and the competitor’s so small that you decide refinancing isn’t worth it,” he says.
Maximise your property valuation
When you’re refinancing property, the mantra ‘location, location, location’ changes to ‘valuation, valuation, valuation’.
A lender will have your property valued as part of the refinancing process. Mansour says he compares multiple lenders for his clients in a bid to get the highest valuation possible. He calls this ‘shopping the val’.
A higher valuation can mean you’re eligible to refinance at a lower interest rate, or being able to borrow more against your equity. According to Mansour, the lender offering the lowest rates can often be more conservative when valuing properties. Hence the need to shop around.
Compare refinance mortgage rates
Do a thorough home loan rates comparison. Getting a lower interest rate on your home loan by refinancing will save you money. Sometimes a lot of money.
The trade-off with some of the lowest rate home loans is they tend to be available on more basic home loans that are light on features (which isn’t an issue if you’re light on savings).
Get loan features that will make a difference
Refinancing to a loan with better features can reduce your rate payable and shave years off your mortgage.
- Offset account: A transaction account linked to your home loan that reduces the amount of interest you pay. Every dollar in this account offsets the outstanding balance on your mortgage and interest payable.
- Flexibility to make extra repayments: Most variable rate home loans allow you to make unlimited additional repayments, while fixed rate loans often have limits on additional repayments of up to $10,000 or $20,000 per year.
- Redraw: If you make extra repayments, a redraw facility allows you to withdraw that money again if you need it.
- Cashback: Some lenders offer refinance cashback as a perk for switching your loan to them. This is becoming rarer but there are still offers out there.
Negotiate the fees
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.
How to refinance your home loan
1. Know your LVR
Most lenders set the interest rates on their loans based on your loan-to-value ratio (LVR). Knowing roughly what your LVR is gives you an idea of where to focus your search (and what rate you may qualify for). You’re likely to get a better interest rate when your LVR is 60% or less.
2. Decide on the type of loan you want
Some refinancers just want a better version of the same kind of loan. But you can also refinance to a different loan structure or type. Generally, you want a loan that’s going to save you interest and/or improve your financial situation.
3. Request a home loan discharge form from your lender
This is the form you need to submit to instruct your current lender that you’re leaving. But there is a very specific reason for requesting it at this stage, according to Money’s home loans expert, Mansour Soltani.
“After you request a discharge form, you will get a call from your lender's retention team. If you have a competitive rate from another lender ready to quote to them, more often than not, they will match it to keep your business.”
4. Submit an enquiry & make an application
Once you’ve chosen a new loan, you usually get the ball rolling by submitting an enquiry with the lender. Typically, you get a call back from a mortgage specialist who talks you through the process and asks initial questions to gauge your eligibility. They’ll explain what you’ll need to submit as part of your application.
In either case, you’ll need to submit some paperwork along with the form, including income documentation (e.g. payslips), bank statements showing the last three months of activity (for all accounts including credit cards), statements for the home loan being refinanced and proof that your property is insured.
5. Get your refinance approved
The lender will go through your application in detail and check your bank account statements line by line. You may be asked to clarify specific points or provide extra detail.
The lender will also do a credit check and order a valuation of your property. Be sure to highlight any recent improvements to your property that might bump up the valuer’s appraisal. If the valuation is high enough that your LVR meets the loan eligibility criteria, your loan will be fully approved.
6. Your old loan is discharged and the new one is settled
You’ll need to sign the loan discharge form and submit it to your old lender. In a lot of cases, the new lender or your mortgage broker will take care of this. All you need to do is sign the form.
Once the old loan is discharged, the new one is settled. Basically that means your new lender pays off your old loan. The old loan is then closed, and your new lender opens a loan account for you. Set a reminder to review your loan in 12 months’ time to make sure it’s still competitive.
Money’s Editor, Sean Callery, shares his refinancing experience tips
"I’ve refinanced my home loan twice in the last three years. Each time I refinanced I got a much better deal, and earned cashback in the process. But on both occasions there were several things I knew by the end of the process that I wish I’d known at the start (how long it can take for starters)."
My tips from my experience of switching home loans:
- Most lenders move slowly. Give them a deadline to speed things up: ‘I absolutely need the refinance done by X date’
- If you ask (and I always have), there is a good chance the new lender will waive the application fee and other upfront fees
- Make sure your bank, credit card and loan statements are squeaky clean before you apply (i.e. no late payments or crazy spending for 3-6 months in advance)
- I’ve refinanced both with and without a broker, and let me tell you that a broker will save you a lot of time, particularly if your application is complicated or you’re unsure whether you’ll be eligible.
Some of our happy home loan refinance customers...
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Refinance home loan FAQs
Are you eligible to refinance your home loan?
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.
The valuation of your property matters a lot here too. If your property has dropped in value since you first took out your loan, refinancing may be more difficult unless you have paid off a big chunk of the loan in the meantime.
“The best thing you can do in this 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.
If you’re concerned about your eligibility to refinance, using a mortgage broker could be worthwhile as they have specialist knowledge of lenders’ policies and ‘serviceability buffers’ (the difference between your actual minimum repayment and the higher amount the lender will use to assess whether you could still afford the loan if rates increase.).
What are the pros & cons of home loan refinancing?
Pros
- You can get a lower interest rate or reduce your loan term (both of which save you interest over the loan term).
- You can borrow against the equity in your home and turn it into cash (e.g. cash-out refinance).
- Provides access to new or better home loan features.
- You can stay with your current lender or switch to another bank.
Cons
- Refinancing costs apply, including discharge fees from your old lender and application fees for the new loan
- Requires a full new home loan application
- Can impact your credit score in the short term
- A home loan top-up increases your debt and will be subject to a serviceability check
How long does it take to refinance a home loan?
You can usually apply for a refinance home loan online in a matter of minutes, but realistically it can take 4-6 weeks for the entire process from start to finish (depending on the lender and complexity of your loan).
How do I refinance a home loan with the same bank?
This could be as simple as asking to be moved to a different product if the lender has a better deal available. However, if you’re changing the structure or type of loan, you will typically still need to complete an application that will be subject to approval.
Examples could include:
- Increasing your loan size
- Changing from an owner-occupier loan to an investment property loan
How often can I refinance my home loan?
There's no strict upper limit on how often you can refinance, but it's important to consider the associated costs. Generally, you need to stay on a particular loan long enough for the savings to outweigh the refinancing 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?
How much does refinancing cost?
According to Money.com.au's analysis of various lenders, refinancing costs can range from $500 to $2,000. These costs typically include:
- Discharge fees for your old loan: $350 - $500
- Application fees for the new loan: $150 - $750
- Mortgage deregistration & registration fees: $130 - $240 (x 2) depending on your state
- Title search fees: $50 - $100
- Settlement fee: $100 - $400
- Property valuation fee: $50 - $600
A lot of the time, it’s possible to negotiate with your new lender to reduce or remove the upfront costs of the new loan. Or if the lender is offering cashback for people who refinance with them, this will likely outweigh any cost.
Can I refinance if I’m on a fixed rate?
Yes, it’s possible to refinance even if you’re on a fixed-rate loan. However, there is usually a fee for breaking the fixed term. This can be several hundred dollars depending on the loan, so it’s worth thinking carefully whether refinancing will be worth it.
If you’re on a very uncompetitive fixed-rate loan with a decent chunk of time left on it, paying the break fee may ultimately be a smart move.
How long can I fix my home loan for when I refinance?
You can generally fix your home loan for a period of one to five years.
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^Comparison rate warning
Home loan comparison rates are calculated based on a loan amount of $150,000 repaid over a 25-year term with monthly repayments. The comparison rates only apply to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan. Check with the provider for full loan details, including rates, fees, eligibility and terms and conditions to make sure the product is right for you.
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