When Should You Refinance Your Home Loan?

TL;DR — Key takeaways

●Refinancing means replacing your current home loan with a new one — usually to get a better rate, access equity, or change loan features.

●There can be more than a 2% difference between variable rates on the market — switching to a better rate can save tens of thousands over the loan term.

●The main costs of refinancing are discharge fees, application fees, and potentially LMI if your LVR is above 80%.

●The “break-even point” is how long it takes for your savings to outweigh the cost of switching. If you plan to sell or move soon, refinancing may not be worth it.

●Tell your current lender you’re planning to switch — they may reduce your rate on the spot to keep your business.

●Most borrowers should review their home loan every 2–3 years. If you haven’t reviewed yours in the last 2 years, you’re almost certainly paying too much.

Most Australians set and forget their home loan. They sign the paperwork, start making repayments, and assume that’s the best they’ll do. It rarely is.

The mortgage market moves constantly. Lenders compete aggressively for refinancers. The rate you got 3 years ago may no longer be competitive — and even a 0.5% rate reduction on a $600,000 loan saves around $3,000 per year. Over 10 years, that’s $30,000. If you’re unsure where your rate sits relative to the market, a broker can tell you in 15 minutes. This guide covers when refinancing makes sense, when it doesn’t, and exactly how to do it.

What is refinancing?

Refinancing means replacing your existing home loan with a new one — either with your current lender (called an internal refinance or rate review) or with a different lender entirely (external refinance). The goal is usually one or more of the following:

Most common
Lower your rate

Switch to a lender offering a better interest rate. Even 0.3% lower on a $700k loan saves around $2,100 per year. Use our loan repayment calculator to see what different rates cost you.

Equity access
Unlock equity

If your property has increased in value, you may be able to refinance and access some of that equity as cash — for renovations, investments, or other purchases.

Better features
Improve structure

Switch from a basic loan to one with an offset account, redraw facility, or better flexibility. The right structure can save more interest than a rate cut alone.

7 signs it’s time to refinance

You haven’t reviewed your rate in 2+ years

The market moves. According to MoneySmart, there can be more than a 2% difference between variable rates on the market. If you haven’t compared in 2 years, you’re almost certainly not on the best available rate.

Your fixed rate is about to expire

When your fixed term ends, your loan rolls onto the lender’s standard variable rate — which is almost always uncompetitive. Start reviewing 3–6 months before expiry. If you’re in this situation now, see our fixed vs variable guide for your options.

Your financial situation has improved

Higher income, lower debts, or a better credit score since you took out your loan could qualify you for a significantly better rate. Lenders price risk — if your risk profile has improved, your rate should reflect that.

Your property value has risen significantly

If your LVR has dropped below 80% due to property value growth, you may now qualify for LMI-free loans and better rate tiers. A new valuation through your broker can confirm this — and it can unlock significant savings.

You want to access equity

Renovations, an investment property deposit, or other major purchases can be funded by refinancing and releasing equity from your home. This needs to be structured carefully — speak to a broker before accessing equity to understand the tax and loan implications.

You need to consolidate debt

Rolling high-interest credit card or personal loan debt into your mortgage can reduce your total monthly repayments. But as MoneySmart warns, this can cost more over time if the loan term is extended. Run the numbers with a broker first — it’s not always the right move.

Your life circumstances have changed

Marriage, divorce, a new child, a change in income, or buying out a co-borrower — major life changes often warrant a home loan review. Your loan structure should reflect your current life, not the one you had when you first signed.

When refinancing is NOT worth it

Refinancing has costs. It only makes sense if those costs are outweighed by the savings over your expected remaining loan term. Here are situations where it often doesn’t stack up:

Situation	Why it may not be worth it
You’re planning to sell in 1–2 years	The break-even period may be longer than your remaining time in the property. Refinancing costs $1,000–$3,000+ upfront and takes months to recoup.
You’re still in a fixed rate term	Break fees can be substantial. Always get a break fee quote from your lender before deciding to exit a fixed rate early.
Your LVR is above 80% and rising	If your new lender charges LMI, the cost can wipe out years of rate savings. This is a critical calculation — your broker must run this before proceeding.
The rate difference is very small	A 0.1% rate improvement on a $400,000 loan saves around $400 a year. If refinancing costs $2,000 upfront, you need 5 years just to break even. Use the MoneySmart mortgage switching calculator to check.
Your credit score has deteriorated	If you’ve had missed payments, defaults, or major debts since taking out your loan, a new lender may not approve you — or may offer you a higher rate than you currently have.

How much does refinancing cost?

Refinancing is not free. Understanding the costs upfront is what determines whether it’s worth doing. Here’s what to expect:

Cost	Typical range	Notes
Discharge fee (current lender)	$150–$500	Fee to close your existing loan
Application / establishment fee (new lender)	$0–$600	Many lenders waive this to attract refinancers
Valuation fee	$0–$500	Often waived or covered by the new lender as an incentive
Legal / conveyancing fees	$300–$1,000	Some lenders cover this — check before applying
Break fee (if exiting fixed rate)	$0–$30,000+	Calculated by lender. Request a quote before proceeding
LMI (if LVR > 80%)	Varies widely	Can eliminate all savings — avoid if possible. LMI paid on the old loan does not transfer to the new one.

The break-even calculation: Add up all your refinancing costs. Divide by your monthly saving. The result is how many months until you’re ahead. If you plan to keep the loan longer than that, refinancing is worth it. Example: $2,500 in costs ÷ $200/month saving = 12.5 months to break even. If you’re keeping the property for 5+ years, you save $2,500 × 48 remaining months = $9,600 net. Your broker can run this calculation with real figures in minutes.

Try negotiating before you switch

Before going through the full refinancing process, try this first: call your current lender and tell them you’re looking at switching to a competitor who’s offering a lower rate. Ask them to match it or beat it.

This works more often than most borrowers realise. Lenders know the cost of acquiring a new customer far exceeds the cost of retaining an existing one. MoneySmart specifically recommends telling your current lender you’re planning to switch — they may reduce your rate on the spot to keep your business.

A Rateseeker broker can do this negotiation for you. They approach your lender with competing offers in hand and a track record of getting rate reductions — without you having to make an awkward phone call. If your lender won’t budge, you refinance. If they do, you’ve saved the switching cost.

How to refinance: step by step

Know your current loan

Find your current interest rate, remaining balance, loan term, and any fees for exiting. Check your mortgage statement or call your lender. This is your baseline.

Compare the market

A broker compares rates across 40+ lenders simultaneously — including rates that aren’t publicly advertised. Use our comparison rate calculator for a quick sense of where you sit, then speak to a broker for the full picture.

Try negotiating with your current lender first

Armed with a competing offer, contact your current lender and ask for a rate reduction. If they match or beat it, you save without the hassle of switching. If they don’t, proceed.

Apply with the new lender

Your broker handles the application. You’ll need payslips, bank statements, identification, and your current loan details. The new lender assesses your financial position and values your property.

Settlement and switchover

Once approved, the new lender pays out your old loan and registers the new mortgage. From this point your new loan and rate apply. The whole process typically takes 3–6 weeks. Your broker manages it end to end.

Review again in 2 years

Don’t set and forget again. Diarise a loan review for 2 years from now. The market will have moved. Your financial position will have changed. Review it — it costs nothing and takes 15 minutes. Book a free check-in with Rateseeker.

Refinancing to access equity: what to know

If your property has increased in value, you may have usable equity — the difference between what your property is worth and what you owe. Refinancing can release this as cash, added to your loan balance.

Example: You bought a property for $700,000 with a $560,000 loan (80% LVR). It’s now worth $900,000 and you owe $520,000. Your LVR is now 58%. You could refinance up to 80% of the new value ($720,000) and access $200,000 in equity — for a renovation, an investment deposit, or other purposes. Your new loan would be $720,000 and your broker would structure it to minimise cost and tax impact.

If you’re accessing equity to purchase an investment property, the loan structure matters for tax purposes. Talk to your broker and accountant before proceeding — how the loan is split between investment and personal use affects what interest you can deduct. See our investment loan guide for more on structuring investment finance.

Frequently asked questions

How often can you refinance your home loan?

There’s no legal limit on how often you can refinance. However, each refinance has costs and each application triggers a credit enquiry on your file. Refinancing more than once every 2–3 years is rarely worth it unless your circumstances have changed significantly. Multiple applications in a short period can also negatively impact your credit score.

Does refinancing reset your loan term?

Only if you choose a new 30-year term. You can refinance and keep your remaining loan term — for example, if you have 22 years left, you can take a new 22-year loan. Resetting to 30 years lowers your repayments but increases the total interest you pay. Always discuss term length with your broker and model both options before deciding.

Will refinancing affect my credit score?

Yes — each formal loan application generates a credit enquiry. Multiple enquiries in a short period signal risk to lenders. A broker submits your application to one lender at a time, based on the lender most likely to approve you. This is far better than applying to multiple lenders yourself and generating multiple enquiries simultaneously.

Can I refinance to consolidate personal loan or credit card debt?

Yes, but with caution. Rolling short-term high-interest debt into a 30-year mortgage may lower your monthly payments but significantly increase the total interest paid. MoneySmart’s debt consolidation guide explains the risks. Your broker can model whether this actually saves you money before you commit.

How do I know if my current rate is competitive?

The RBA publishes average outstanding mortgage rates monthly — compare yours against the published average. A Rateseeker broker can also check your rate against 40+ live lender offers in real time. Book a free 15-minute rate check — no obligation, and you’ll know exactly where you stand within minutes.

When Should You Refinance Your Home Loan?

What is refinancing?

7 signs it’s time to refinance

When refinancing is NOT worth it

How much does refinancing cost?

Try negotiating before you switch

How to refinance: step by step

Refinancing to access equity: what to know

Frequently asked questions

Related articles.

How Much Deposit Do You Need for a Home Loan?

First Home Buyer’s Guide to Home Loans in Australia (2026)

Hidden costs of buying a home in Australia: what first-time buyers should know.

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