How to Refinance Your Home Loan in Australia

Refinancing your home loan in Australia means switching your existing mortgage to a new lender — or renegotiating the terms with your current bank — to secure a lower interest rate, better features, or both. Most Australians who haven’t refinanced in the past two to three years are almost certainly paying more than they need to, and switching can save $3,000–$8,000 per year on an average-sized loan.

General information only. This article does not constitute financial advice. Consider your own circumstances before making investment decisions.

Why Refinancing Makes Financial Sense Right Now

After the RBA’s rate-cutting cycle that began in late 2024 and continued through 2025, the cash rate sits at 3.35% as of mid-2026. Despite that, many major banks are still charging existing customers variable rates well above 6%, while advertising headline rates of 5.49% or lower to attract new borrowers. That gap — sometimes 0.5% to 0.8% — is what the industry quietly calls the loyalty tax.

On a $600,000 mortgage, a 0.5% rate reduction saves around $3,000 per year in interest. Over five years, that’s $15,000 — and that’s before you factor in compounding. Challenger lenders like Ubank, Athena, and Tic:Toc regularly advertise rates 30–50 basis points below the big four banks’ standard variable rates, with far fewer hoops to jump through than a decade ago.

Check What You’re Actually Paying

Before calling anyone, log into your internet banking and find your current interest rate — it’s usually on the loan details screen. Then head to a comparison site like Canstar or RateCity and filter by your loan type (owner-occupier vs. investment, principal & interest vs. interest-only) and your LVR (loan-to-value ratio).

If your property has increased in value since you bought it — which is true for most Australian capital city owners — your LVR may have dropped below 80%, unlocking meaningfully better rates and eliminating the need for lenders mortgage insurance (LMI). A loan that was 85% LVR at purchase might now be 66% LVR, giving you access to rate tiers reserved for lower-risk borrowers.

Step-by-Step: How to Refinance Your Home Loan

1. Calculate your break-even point. Add up all switching costs (discharge fees, application fees, settlement fees). Divide that total by your monthly interest saving. If break-even is under 18 months, refinancing almost always makes sense.

2. Gather your documents. Lenders want two to three recent payslips, your most recent tax return, three months of bank statements, and a rates notice showing the property address. Self-employed borrowers typically need two years of tax returns.

3. Apply with one or two lenders. Don’t spray applications everywhere — each hard credit enquiry temporarily affects your credit score. Pick the best one or two options, or use a mortgage broker who can access multiple lenders without stacking enquiries on your file.

4. Wait for the valuation. Your new lender will order an automated or physical valuation of your property. This determines your final rate tier — a higher-than-expected valuation can push you into a lower LVR bracket.

5. Loan settlement. Once approved, the new lender pays out the old one directly. The process typically takes four to eight weeks from application to settlement.

Watch Out for These Costs Before You Switch

Refinancing isn’t free, but the costs are usually minor compared to the savings:

• Discharge fee: $150–$400 charged by your current lender to close the loan
• Government mortgage registration fees: Varies by state — around $130 in Victoria, $200 in NSW
• New lender application fee: Many lenders now waive this, but some still charge up to $600
• Break costs: Only applies if you’re breaking a fixed-rate loan — can run into thousands and should be requested in writing before committing

One cost people consistently overlook: if your new loan comes with an offset account charging a monthly fee, make sure you’re actively using it. Paying $15/month for an offset you never maintain is $180 a year for nothing.

Frequently Asked Questions

How often should I refinance my home loan?

There’s no set rule, but reviewing your rate every two to three years is sensible. The Australian mortgage market is competitive enough that a better deal is almost always available, especially as your equity grows and your LVR improves.

Does refinancing affect my credit score?

A hard credit enquiry from a new lender application stays on your file for five years, but its impact on your score fades significantly after 12 months. Refinancing once every few years is unlikely to cause problems for most borrowers with a solid repayment history.

Can I refinance if I’m on a fixed rate?

Yes, but you’ll need to request a break cost estimate from your current lender before proceeding. In a falling rate environment, break costs can be substantial — sometimes $5,000 to $20,000 depending on the remaining fixed term and the rate differential — which may make it worth waiting until your fixed period expires.