Refinancing home loans

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A guide to refinancing

Updated March 05, 2024
Written by James Hurwood
Reviewed by Stephen Zeller

How to refinance a home loan

Selling Houses Australia host, Andrew Winter, gives a brief overview of how refinancing works, and what the refinancing process looks like.
Andrew Winter
Home Loans

Farewell paperwork, it's Home Loan Heaven


Why refinance your home loan?

Refinancing lets you swap your current home loan for a new one, which can come with a whole slew of potential benefits including:

  • A better interest rate. Shopping around affords you the luxury of finding a home loan with a lower interest rate.
  • Avoiding a high revert rate. Fixed rate and introductory-period loans generally revert to a standard variable interest rate after a pre-determined amount of time, which is often much higher than the market average rate. Consider reviewing your fixed interest rate a month or two prior to the end of the fixed rate period, but be aware that you may pay a break fee when refinancing a fixed rate home loan.
  • Access to more loan features. Your current home loan may not offer the features that you now might find useful such as an offset account, redraw facility, the option to split your loan or the ability to make additional repayments. By shopping around and refinancing, you can end up with a home loan that has the features you want.
  • Debt consolidation. If you have an array of outstanding loans with higher interest rates than your home loan, you could consider refinancing in order to consolidate all of your debt into the one loan, with a lower interest rate. However it’s worth noting that you may pay significantly more in interest charges over the life of your home loan if you consolidate your debts in this way.
  • Adaptability and flexibility. Refinancing gives you an opportunity to reassess your loan term and home loan repayment frequency. If done smartly, this could potentially save you money over the life of the loan.

Expert tips for refinancing

Our General Manager of Money, Stephen Zeller, has some handy tips for any property owners thinking of refinancing:

Stephen Zeller
General Manager – Money

Keep the loan term in mind

If you’re looking to save money when thinking about refinancing, consider the remaining term for your existing loan against what the repayments will be for the proposed new loan with the same term, so you’re getting a more ‘true’ comparison of whether the new option is going to save you money. If you were to take up a new lower rate option, but the term is longer than your current loan, you may end up paying more interest over the life off the loan.

Factor in the fees

There are various fees involved which can often be overlooked when refinancing a home loan, including government fees which can be hundreds of dollars depending on your scenario. Instead of dipping into your savings to cover these lender and government fees, you may consider increasing your new loan amount by a couple of thousand dollars, or reducing your current loan balance by the same prior to settlement to avoid any potential shortfall and delays.

Our Home Loan Specialists are here to help!

Review your home loan every two years by completing a ‘Home Loan Health Check’. Feel free to reach out to our expert Home Loan Specialists who can assist with reviewing your current home loan to see if they can help you save money and pay off your home loan sooner rather than later; best of all, this will cost you nothing!

What is refinancing a home loan?

Understanding refinancing

How does refinancing a home loan work?

How to refinance a home loan

Generally, the process to refinance a home will involve the following steps:


  1. Research

Find out the details of your home loan, including your current interest rate and mortgage repayments, as well as your potential break costs, and determine what changes could assist you in meeting your personal and financial goals.


  1. Compare

Use our home loan comparison tool to assess your options and look for a great-value product based on its rates, fees, features and more. Remember to check the comparison rate!


  1. Speak to an expert

Our Home Loan Specialists can answer some of the burning questions you might have about refinancing.


  1. Find out the estimated value of your property

Ask a real estate agent for a free property appraisal or price guide for your suburb, especially if you’ve completed renovations or your last valuation was more than 12 months ago. You may find that your property value has changed noticeably.


  1. Application

Undergo a full application process, credit analysis, documentation, valuation and assessment with your new financial institution. Even though you’re a card-carrying homeowner now, you’ll still be assessed against the same stringent lending criteria as everyone else.


  1. Approval

Receive unconditional approval from a lender to refinance.


  1. Completion of documentation

Your new lender will send you a set of documents – including the contract for your new home loan – for you to complete and sign. Once the lender has received and approved the completed documentation, you’ll be able to proceed to settlement.


  1. Settlement

When refinancing, your new lender will replace the old lender on the title deeds to the home and pay out the old lender’s loan amount with the new loan funds.

When can you refinance a home loan?

You can usually refinance your mortgage at any time, though it’s generally a good idea to have at least 20% equity in your property before refinancing – and subsequently a loan-to-value ratio (LVR) smaller than 80% in order to avoid paying lenders mortgage insurance (LMI).

If you’re on a fixed interest rate home loan, you may want to wait until your fixed term expires before doing so in order to avoid expensive break fees. If you’re on a variable rate home loan, you’ll typically pay less in fees when refinancing.

How long does refinancing take?

The costs of refinancing a home loan

How much does it cost to refinance a home loan?

Do I need to pay stamp duty again when refinancing?

How much equity do you need to refinance?

Does refinancing affect credit score?

Important to know

What to consider when refinancing

The pros and cons of refinancing

Do I need a conveyancer or lawyer to refinance?

Meet our home loans expert, Stephen Zeller

Stephen Zeller
General Manager – Money

Stephen has more than 30 years of experience in the financial services industry and holds a Certificate IV in Finance and Mortgage Broking. He’s also a member of both the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and the Mortgage and Finance Association of Australia (MFAA).

Stephen leads our team of Home Loan Specialists, and reviews and contributes to Compare the Market’s banking-relating content to ensure it’s as helpful and empowering as possible for our readers.