Guide · Refinancing
How to Refinance Your Home Loan (and When It's Actually Worth It)
Most people set up a home loan once and never look at it again. Meanwhile the lender quietly leaves them on a rate they'd never offer a new customer. Here's how to check if you're one of them, and what refinancing actually involves.
Refinancing just means paying out your current home loan with a new one, either at a different lender or a fresh product with your existing one. People do it to get a sharper rate, to pull equity out for a renovation or an investment, to consolidate debts, or to escape a lender who has stopped looking after them. Done for the right reason, it can save you real money. Done for the wrong reason, it can cost you. So let's separate the two.
When refinancing is worth it
- Your rate has drifted. Lenders reserve their sharpest pricing for new business. If your loan is more than a couple of years old and you've never renegotiated, there's a fair chance you're paying more than you need to.
- Your situation has improved. More equity, a higher income, or paying off a car loan can move you into a lower risk band and better pricing.
- You want to use your equity. Renovating, buying an investment, or covering a big expense at home loan rates rather than personal loan rates.
- Your current lender won't budge. Sometimes the fastest way to get a better deal is to be ready to leave. I often get a client's existing bank to sharpen up simply because a competing offer is on the table.
Try this first
Before you refinance anywhere, ring your lender and ask for a rate review. Say you're thinking of leaving. If they drop your rate, you've saved yourself the paperwork. If they don't, that tells you something too. Either way, I can run the numbers with you on a free call.
The costs people forget to count
A lower rate is only half the story. Switching has its own costs, and they need to be smaller than what you save. Here's what to add up before you decide.
| Cost | What it is | Rough range |
|---|---|---|
| Discharge fee | Your old lender closing the loan | $150 to $400 |
| Settlement / new loan fees | The incoming lender setting things up | $0 to $600 |
| Government mortgage fees | Deregistering and registering the mortgage | $150 to $400 |
| Fixed rate break cost | Only if you're breaking a fixed term early | Varies, can be large |
| LMI (again) | If your equity is under 20 percent, it can apply on the new loan | Situation dependent |
Two traps to watch
First, if you're on a fixed rate, breaking it early can trigger a break cost that wipes out the benefit. Second, refinancing over a fresh 30 year term lowers your repayment but can add years of interest. Keep your remaining term in mind, not just the monthly figure.
How the process actually runs
- We look at your current loan, your rate, your equity and your goals, and work out whether switching stacks up.
- I compare options across my panel of more than 40 lenders and shortlist the ones that genuinely fit, not just the loudest ad.
- You pick a direction, we prepare the application and submit it with your documents.
- The new lender assesses and approves, then the two lenders settle the switch between them. Your repayments move to the new loan.
Start to finish it's usually a few weeks, and most of the heavy lifting sits with me, not you. If you'd rather not deal with the back and forth of lender shopping, that's exactly the part I take off your plate. You can read more about how I approach it on the refinancing page, or see what a mortgage broker actually does day to day.
The best time to check your home loan is before you think you need to. A ten minute conversation once a year is how you avoid quietly overpaying for a decade.
Not sure if your loan is still sharp?
Send me your current rate and I'll tell you honestly whether it's worth moving. No pressure, no fee.
Frequently asked questions
How much does it cost to refinance a home loan?
Usually a few hundred dollars in discharge and government fees, and sometimes a new loan fee. The real question is whether the interest you save outweighs those costs. In many cases it does within the first year, but breaking a fixed rate can change the maths, so it's worth checking your numbers first.
Will refinancing hurt my credit score?
A refinance application creates a credit enquiry, which can nudge your score slightly. One application is minor. Applying to several lenders at once is what does damage, which is another reason to have a broker target the right lender the first time rather than scatter applications.
How often can I refinance?
There's no legal limit. Some people refinance every couple of years to stay on a competitive rate. The practical limit is whether the savings each time outweigh the switching costs, and whether your income and equity support a fresh application.
Can I refinance to access equity in my home?
Yes. If your property has grown in value and you've paid the loan down, you may be able to borrow against that equity for a renovation, an investment or another purpose. Lenders will still assess whether you can service the larger loan, so it isn't automatic.
Important information
This information is general in nature and does not take your personal objectives, financial situation, or needs into account. It is not credit assistance or a recommendation to enter into any particular credit contract. Consider whether it is right for you and seek advice before acting. Lending is subject to a lender's eligibility and approval criteria. Terms, conditions, fees, and charges apply.
Greenwood Finance · ABN 23 671 049 693 · Credit Representative No. 551942.
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