Find out the details of your home loan, including your current interest rate and mortgage repayments, and determine what changes could assist you in meeting your personal and financial goals.
Use our home loans comparison service to assess your options and look for a great-value product based on their rates, fees, features and more.
Our home loan consultants can answer some of the burning questions you might have. They may also be able to help you negotiate a better rate with your current lender or refinance to a different one.
Have your property valued, especially if you’ve completed renovations or your last valuation was more than 12 months ago.
Undergo a full application process, credit analysis, documentation and assessment with a new financial institution.
Have your financial institution’s required documents at the ready to support your application. Ensure you meet the lender’s eligibility criteria.
Receive unconditional approval from a lender to refinance.
When refinancing, your new lender will receive the title deeds to the home from your old lender and will pay them the money for the loan.
You may need a conveyancer to help you with this (see below).
It may not be necessary to hire a conveyancer when refinancing your home loan, especially if you’ve negotiated a better deal with your current lender since you’ll have already sorted out the settlement, title transfers and legal obligations related to the home buying process.
As the conveyancer’s role is to ensure the smooth purchase or sale of your home, their services will be redundant during the refinancing process. However, consider your own personal and financial situation and discuss any concerns with a professional.
The length of the refinancing process can depend on your lender. Some may get it done in as little as a week while others will take a bit longer, sometimes up to 60 days or more.
The process of refinancing your home loan can take as long as your initial home loan application, but is generally more likely to take longer if you’re switching to a different lender rather than staying with your existing one.
Refinancing will usually cost you. However, the costs may vary depending on your circumstances, and it’s possible to reduce how much you have to pay.
Some common costs may include:
Check the terms and conditions of your loan for a breakdown of the fees and charges, if any at all. If you aren’t careful, you might end up paying more than you were before.
In most cases, you need at least 5% equity to refinance. If you have that, you can usually refinance at any time if you have good credit.
However, it’s usually a good idea to refinance with at least 20% equity in your home to avoid taking out LMI. The better your credit, and the more equity you have in your home, the better the chance there is that you’ll get a better deal and be charged a lower interest rate.
While you don’t need a down payment to refinance, you’ll need at least 5% equity in your property. When refinancing, this equity takes the place of the deposit.
Yes, you can refinance a fixed rate loan. However, you should be wary of break fees. Break fees are charged as a penalty if you are to refinance or end the loan during the agreed fixed term, and can cost as much as tens of thousands of dollars in the most extreme cases.
Stamp duty is a tax imposed by states and territories during the sale of a property and is therefore not a home loan cost, but rather a home buying cost. Since refinancing involves switching home loans, you will most likely not have to pay stamp duty.
A possible exception to this is if the title of the property or ownership details are changing. If the name of the borrower changes, then stamp duty may apply. You might also have to pay stamp duty if you increase the size of your loan, on the additional amount borrowed. Mortgage registration fees can also apply.
Speak to a certified home loan specialist, a mortgage broker, or visit your state’s relevant housing authority for more information on stamp duty.
Unless you’re a serial refinancer, refinancing your home won’t permanently affect your credit score. A formal credit enquiry is required when refinancing, and it will stay on your credit history for five years.
However, you can build up your credit score easily as long as you continue to make regular on time repayments to your new lender. If you’re refinancing to consolidate your debts, this can also have a positive impact on your credit score.
A one-off rejection for a home loan application might not hurt your credit score, but multiple failed applications probably will.
Refinancing with your current lender may not necessarily give you a ‘better’ interest rate, but it might be easier. Your current lender has all your information, so the process will probably be much simpler than if you switched to a different financial institution.
However, a different lender might be offering something better, and there are hundreds of home loan products on the market now. Plus, nowadays it can be quick and painless to refinance to another lender.
1Australian Bureau of Statistics Lending Indicators, September 2021.