Whether you’ve just bought your first home or are years into paying it off, the job doesn’t stop there. You should continue scanning the market for competitive deals and if you find one you like, a home loan refinance allows you to make the switch.
2025 has seen the first national cash rate drop by the Reserve Bank of Australia (RBA) in over four years. With the rate having fallen by 0.50% as of June, lenders have followed suit in slashing their mortgage interest rates.
There are more rate decreases on the horizon, too, so plenty of Australians will be looking to refinance their home loan with a new lender or the same bank. Regardless of your reason for refinancing, your next mortgage could hold the key to greater savings or added flexibility.
When can you refinance a home loan?
There’s no restriction on how soon you can refinance your home loan after you settle it. However, there are several reasons why it’s best to wait at least a year or two before looking to do so.
First of all, all mortgages come with a range of charges. These can include fees for discharging your mortgage, setting up your new loan with a different lender or, if you’re on a fixed interest rate, exiting your agreement early. This could cost you hundreds or thousands of dollars overall, which might negate the short-term benefit of switching lenders.
Secondly, each home loan application is recorded on your credit file as an enquiry, which your lender will check. Multiple credit enquiries in a short period can harm your credit score and chances of approval for subsequent loans.
By waiting at least 12 months or more, you’ll give your loan more time to breathe and build up a positive repayment record before moving on to the next one.
Why you might want to refinance your home loan
There are plenty of reasons why someone might wish to refinance their current home loan. Here are some of the most common:
- Lock in a better interest rate: it may be as simple as securing a lower rate on your home loan. For example, with a $400,000 loan balance and 25 years remaining, you could save $119 per month and over $35,000 in total by switching from a loan at 6.25% p.a. to another at 5.75% p.a., even with a $500 exit fee.
- Adjust your loan term: refinancing can also be used to increase your loan term. It’s a common way to alleviate financial pressure among mortgage payers. Doing so reduces your repayments but will increase the interest you’ll pay overall. Conversely, if you have room in your budget, you can shorten your loan term to slash your total interest outlay.
- Access equity in your home: by refinancing your home loan, you can borrow against your home equity, thereby increasing your loan amount and freeing up more cash. This can be used freely to consolidate debts, fund home renovations or invest in another property. The amount of equity you can access is usually 80% of your home’s value minus your mortgage balance.
- Remove a guarantor or cosigner: many homebuyers sign up for their first mortgage with a parent or grandparent as a loan guarantor. This helps maximise their chances of approval. The only way to remove them from your agreement is by taking out a new loan without them, which may be easier after the first few years of paying off your debt. The same is true if you bought a property with your partner and have since separated.
Why apply for a home loan with Savvy
How much you could save by refinancing your home loan
| Home loan balance | Term remaining | Interest rate | Monthly repayment | Refinanced rate | New repayment | Monthly saving | Overall saving |
|---|---|---|---|---|---|---|---|
| $500,000 | 25 years | 6.15% p.a. | $3,268 | N/A | N/A | N/A | N/A |
| $500,000 | 25 years | 6.15% p.a. | $3,268 | 6.05% p.a. | $3,237 | $31 | $9,211 |
| $500,000 | 25 years | 6.15% p.a. | $3,268 | 5.90% p.a. | $3,191 | $76 | $22,949 |
| $500,000 | 25 years | 6.15% p.a. | $3,268 | 5.70% p.a. | $3,130 | $137 | $41,120 |
| $500,000 | 25 years | 6.15% p.a. | $3,268 | 5.45% p.a. | $3,056 | $212 | $63,595 |
| Rates are used for illustrative purposes only and aren’t necessarily reflective of the rates you’ll receive on your refinanced home loan. Calculations don’t include additional mortgage break or origination fees. | |||||||
As you can see from the table above, you’ll stand to save thousands overall and potentially hundreds each month by refinancing your loan. For example, making the move all the way from 6.15% p.a. down to 5.45% p.a. would net you over $200 in savings each month and more than $60,000 overall.
However, it’s important to understand that several factors impact the total savings on your refinance deal, not just interest rates. These include:
- Loan terms: as mentioned, the length of your loan will have a significant impact on the interest charged. In general, the longer your loan term, the more you’ll pay. When it comes to refinancing, though, having longer left to pay means you may stand to benefit more from switching to a lower rate.
- Loan balance: not only does it cost more to repay a larger home loan but interest will also be higher. That’s because it’s calculated based on your outstanding balance. If you have two loans with the same interest rate and term but different balances, the loan with the lower balance will cost less.
- Loan fees: you’ll likely have to pay other fees on top of your mortgage’s interest, such as monthly or annual charges, application fees and early termination costs.
- Payment frequency: whether you pay off your mortgage fortnightly or monthly also makes a difference. Because fortnightly repayments add up to the equivalent of 13 months per year, your balance will drop more quickly and reduce the interest you pay slightly. Also, making extra repayments will clear your debt sooner and cut down on interest.
How to refinance your home loan with Savvy
The home loan refinance process is a simple one when you apply through Savvy. Here’s how it works:
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Fill out our online quote form
First and foremost, you can complete our simple home loan enquiry form. This tells us about you, your current loan and property and why you’re looking to refinance.
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Discuss your options with a trusted mortgage broker
Once we receive your details, a partnered mortgage broker will get to work comparing your available options from their lender panel. They’ll contact you to discuss your situation and options moving forward.
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Have your application prepared and submitted
If you’re happy with the deal on offer, your broker will help prepare your application for formal submission to the lender. You’ll be able to sit back and let them handle the heavy lifting for you.
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Have your property re-valued
In some cases, your new lender may require your home to be re-valued. This is to make sure that they aren’t lending an amount above its market price.
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Receive formal approval
Once your lender is satisfied with the application, they can formally approve it. Your broker will keep you updated with all developments related to your application.
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Settle your new loan and pay out your old one
The final step is to sign off on all your new loan documents and have the mortgage settled. Once that’s done, your old mortgage can be paid out directly by your new lender.
The cost to refinance a home loan
As mentioned earlier, there’s a range of fees to consider when refinancing your home loan. Let’s take an example of someone in New South Wales switching from their current fixed rate mortgage (we’ll call it Mortgage A) to a new variable rate mortgage with a different lender (Mortgage B).
Mortgage A has an outstanding balance of $350,000 and 20 years remaining on its term. The interest rate was fixed at 5.75% p.a. for four years, of which there are two years left to run. Here are the fees someone can expect to pay for refinancing from Mortgage A to Mortgage B:
Mortgage A closing costs
- Fixed rate break cost: $4,200*
- Mortgage discharge fee: $400 (can range from $150 to $1,000)
Mortgage B setup costs
- Application fee: $600 (can range from $150 to $800)
- Valuation fee: $300 (can range from $200 to $600)
- NSW mortgage deregistration and registration fees: $351.40 (as of the 2025-26 financial year)
- NSW title search fee: $18 (as of the 2025-26 financial year)
*Calculated based on Lender A offering a four-year fixed rate of 5.15% p.a. at the time of refinancing.
With these fees, the total cost of refinancing adds up to $5,869.40. It’s worth noting that the break cost and discharge, application and valuation fees were all examples for illustrative purposes. You may be charged less or more for each of these when you apply to refinance your home loan.
The documents you’ll need for a home loan refinance
You’ll find that the documents required for a home loan refinance are very similar to what you were required to produce when you first bought your home. These include:
- Sufficient ID, such as a combination of your passport, driver’s licence, birth certificate, Medicare card and more
- Your most recent payslips (at least two in most cases) or tax returns if you’re self-employed
- 90 days of bank statements from your transaction and savings accounts
- Information about your living expenses (these can be estimated by your mortgage broker)
- Information about your current job, including your title and how long you’ve been there
- Information about your home loan, including the balance and term remaining
- Any outstanding liabilities beyond your current home loan, such as a HECS debt or other personal or car loans
- Information about your property, including its value, location and ownership (whether it’s solely owned by you or others)
If you’re refinancing with the same lender, you may not need to supply all of the above documents again. Depending on how long ago you took out your initial home loan, your lender may still have things like your ID on file. They’ll also have your financials readily available if you moved your banking over as part of your mortgage.
How does my deposit work when refinancing my home loan?
While a cash deposit is required on your initial home loan (unless you applied with a guarantor who secured the agreement with equity in their property), this isn’t typically the case with a refinance. Over the time spent paying off your mortgage, you’ll have built equity in your property, which will also be impacted by any increase in its value over your repayment term. This equity will serve as the 20% deposit required for your new home loan.
However, there are situations where you may have taken out your home loan initially with a smaller deposit. This may have been the case through a guarantor, government grant such as the First Home Guarantee, the now-defunct First Home Loan Deposit Scheme (FHLDS) or simply by paying LMI. If you haven’t built up enough equity in your property since the point of purchase to cover a 20% deposit, you’ll be required to pay LMI again if you have no guarantor attached.
Types of home loans
Home loan refinance tips
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Be clear about why you’re refinancing
Whether it’s lowering your interest rate, consolidating debt or unlocking equity for renovations (or a combination), having a clear purpose helps you stay focused and avoid unnecessary borrowing.
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Know your home’s current value
Understanding your property’s market value is key to determining how much equity you can access. While professional valuations provide the most accurate assessment, you can also research recent sales in your area or ask a real estate agent for an estimate.
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Review your existing loan
Take stock of your current home loan terms, including your balance, interest rate and any fees associated with breaking your loan early, to determine whether refinancing is worth it.
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Check your credit score
A healthy credit score improves your chances of approval and helps you secure the best interest rates. Review your credit report to identify any inaccuracies and address them before applying.
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Consider the timing
If you’ve recently taken out your loan, early termination fees might make refinancing less cost-effective. Similarly, refinancing during a rising interest rate market could lock you into a higher rate, so weigh up your options carefully.
Home loan refinance offers
Many lenders offer incentives for refinancing your home loan with them. These include:
Home loan cashback deals
The most common refinance offer from lenders is a cash incentive to sign up with them. Once your refinance is completed, you can have the money transferred to your account to use however you like. In many cases, these deals can range from $2,000 to $4,000.
It’s important to note that you should carefully review the home loan itself when deciding on which deal is best for you. Although $3,000 cash does sound very attractive at first, it might not be worth it if that lender charges a higher rate and fees.
Introductory interest rates
Although not specific to refinancing, this is another regular deal offered by lenders. Introductory rates are typically set at a lower level for a short period before returning to a higher rate thereafter. This means you can take advantage of initial savings on your loan.
However, like cashback offers, you should crunch the numbers to see if the initial period of savings works out in your favour in the long run. There’s no use going for it if you’ll end up paying more overall.
