What is home loan refinancing?
Refinancing means to switch from one home loan product to another. You may be swapping to a different loan product with your current lender, changing your mortgage balance or terms, or moving to a different lender that will take over your existing mortgage. You may also be able to refinance other products like personal loans, car loans, and credit cards (the latter through a balance transfer).
Why should you refinance your home loan?
There are many reasons you may choose to refinance your mortgage. You might want to:
- Save money: By refinancing, you could get a lower interest rate, potentially saving you thousands of dollars across the life of your loan. You may also be able to get a cashback deal to help cover the cost of switching.
- Borrow more: If you want to borrow more money, perhaps to pay for renovations, refinancing could help you do so.
- Restructure your loan: You may want to change how your loan functions, like moving from principal-and-interest to interest-only repayments or from a variable rate to a fixed rate.
- Bundle your financial products: Moving all your banking business to a single financial institution could simplify your banking or even give you access to package deals. Just make sure you’re not paying more for the convenience.
- Add features: You may want to switch to a home loan with a wider range of features like an offset account, redraw facility, or the option to bundle your mortgage with other financial products, like a credit card.
- Consolidate debts: It may be possible to consolidate multiple debts into your home loan when refinancing, but as this can be financially risky, it’s worth getting professional financial advice first. As mortgages generally come with long loan terms (sometimes up to 40 years) rolling existing debt into one may attract much more interest in the long run.
How much can you save by refinancing?
While the cost of refinancing can vary, switching home loans can put you in front financially – often significantly.
Just how much you can save will depend on your new loan. As the table below shows, taking out a home loan with the lowest average variable rate from an award-winning lender could see you paying a less than the market average on our database.
On a $600,000 mortgage, that could mean saving around $300 on repayments each month, which would add up to about $108,000 of savings over a 30-year loan term.
Loan type | Average | Monthly | Total interest |
|---|---|---|---|
Award | 5.84% p.a. | $3,536 | $672,894 |
Market | 6.61% p.a. | $3,836 | $780,930 |
Difference | 0.77% | $300 | $108,036 |
Source: www.canstar.com.au - 21/09/2026. Based on owner-occupier variable rate loans on
Canstar’s database, available for a loan amount of $600,000, 80% LVR, and principal &
interest repayments; excludes introductory, first home buyer only, and other special condition
loans. Award winners' average rate is based on the lowest rate loans offered by winners of
Canstar's Variable Home Lender Outstanding Value Award. Repayment calculations based
on a $600,000 loan over 30 years.
Remember, some lenders also offer cashback deals and other incentives to encourage you to refinance. These deals can help you recover all or part of the costs to refinance, but shouldn’t shape your decisions on a long-term product like a home loan.
Make sure your new home loan comes with a competitive rate and the features you need.
What happens when you refinance your home loan?
Refinancing a home loan is as simple as submitting an application, either with a new lender or your existing one. If you’re approved, you’ll be issued a new home loan and the funds borrowed through it will be used to repay your existing mortgage. Your previous mortgage is typically then discharged (closed) and you’ll begin paying off the new loan.
If you’re switching lenders, there will also be a process to remove your old lender’s interest in your property and add your new lender’s interest. Your new lender will generally organise this.
How long does it take to refinance a home loan?
How fast you can refinance your home loan will vary depending on the lenders involved, the loan, and your personal circumstances. It can take as little as a couple of days in some cases or over a month in others.
There are a number of steps involved in refinancing, including:
- Doing your research
- Applying for a new loan and getting approved
- Transferring your property’s title deed
- The settlement of your new loan
- The closure of your old one
You may be able to speed up the process by getting all your paperwork, including proof of income, current home loan statements, and details of other debts, ready ahead of time.
The process may also be faster if you’re refinancing with the same lender as they’ll already be an interested party on your property’s deed and will be aware of your financial situation.
Who can refinance their home loan?
If you’ve owned your property for some time and have enough equity built up, as well as a good credit score, steady income, and a habit of making your repayments on time, there’s a good chance you’ll be able to refinance.
Each lender has its own eligibility requirements you’ll have to meet before you’re approved, similar to the ones you met when you took out your existing loan.
However, it’s important to note not every borrower will necessarily be able to refinance. Typically, lenders will only allow borrowers with at least 20% equity to refinance – meaning your loan is no more than 80% of your property’s value at the time you want to refinance – without paying for lenders mortgage insurance (LMI). If your existing loan is fairly new and you put down a deposit of less than 20%, or if your property’s value has dropped, you may not meet this threshold.
How much does it cost to refinance a home loan?
The total cost of refinancing a home loan will depend on how much your current lender charges to discharge your mortgage and what your new lender charges to establish a new home loan. You could pay as little as $250 in refinancing fees, according to some of loan products on Canstar’s database. A more mid-range, average outlay is $747, and at the top end of the scale you could pay $1,994 in fees.
These costs don’t take into account mortgage registration and deregistration fees, which are charged by state and territory governments and vary across the country.
It’s worth keeping in mind that some lenders might waive certain fees in order to secure your business. And, if the lender you’re refinancing too doesn’t offer a fee waiver, it could be worth asking for one. The worst it can say is ‘no’!
What fees do I have to pay when refinancing?
Refinancing can come with a range of costs. Some fees you may have to pay include:
- Discharge fees: A fee charged by your current lender to cover the admin costs of closing your existing loan.
- Application fees: A fee charged by your new lender to cover the admin costs of setting up your new loan.
- Valuation fees: A fee charged by your new lender to determine your property’s current value for security and equity purposes.
- Lenders Mortgage Insurance (LMI): If you have less than 20% equity in your property, you may need to pay LMI, even if you’ve already paid it on your existing home loan.
- Break fees: If you’re refinancing from a fixed rate home loan you may need to pay a break fee. This helps the lender recoup some of the interest you’d promised to pay them over the remaining fixed term.
Here’s a breakdown of the minimum, average, and maximum cost of key refinancing fees:
Fee | Minimum | Average | Maximum |
|---|---|---|---|
Discharge | $115 | $331 | $795 |
Application | $150 | $463 | $995 |
Valuation | $50 | $252 | $400 |
Documentation | $55 | $303 | $600 |
Legal | $200 | $298 | $430 |
Settlement | $100 | $249 | $595 |
Source: www.canstar.com.au - 28/07/2026. Based on owner occupier variable loans on Canstar’s database, available for a $600,000 loan amount, 80% LVR and principal and interest repayments, excluding introductory, first home buyer only and other special condition loans. Valuation, legal, documentation and settlement fees are often calculated at cost; the values in this table are based only on lenders that advertise a fixed value. Total fees do not include at cost fees.
How to compare home loans when refinancing
Thinking about refinancing? Here are some things to consider when looking at different home loans:
- Interest rate: The interest rate, expressed as a percentage per year (p.a.), is essentially how much a lender will charge you to provide the funds you need to buy a home. A lower interest rate can mean smaller repayments.
- Comparison rate: The comparison rate takes into account both the interest rate and most fees and charges. It can give you a clearer picture of a loan’s true cost.
- How interest is charged: The interest rate will be either variable or fixed. Variable interest rates can change over time, whereas fixed rates will stay the same for a set period (usually between one and five years). While variable rates loans can lack certainty, they often make up for it by offering more features, like extra repayment options. Some lenders also offer split rate loans, which let you lock the rate on a portion of your loan while benefiting from the features of a variable rate loan on the remainder.
- Fees: When refinancing you may need to pay fees like discharge, application, and potentially break fees. Your new loan may also come with certain ongoing fees. Some lenders may offer you cashback or other rewards to entice you to refinance with them, which can help offset costs.
- The required loan-to-value (LVR) ratio: A loan’s LVR refers to the amount you’re borrowing compared to what your property is worth. For example, if your property is worth $800,000 and your home loan balance is $500,000, your LVR would be 62.5%. Lenders tend to give lower rates to borrowers with lower LVRs, while borrowers with LVRs of 80% or more might need to pay for LMI.
- The features on offer: Some home loan products come with useful features that can help you reduce your interest costs or pay back your home loan faster. These can include offset accounts, redraw facilities, flexible repayment schedules, or options to make extra repayments.
- The type of home loan: Depending on your situation, you may be refinancing to a different type of home loan, like an interest-only loan, investor loan (if you’re turning your primary residence into an investment property), or even a construction loan (if you’re building a new house).
- The loan’s Star Rating: If the loan product has been rated by our expert researchers, it will have a Star Rating in the comparison table above. Loan products with a 5-Star Rating have been found to offer customers outstanding value on both price and features.
How to find the best refinance home loan rates?
Some of the best refinance home loan rates from our Online Partners are displayed on the comparison table at the top of this page. To get more tailored results, click the button at the top of the page and answer a few questions about your desired loan and your property’s value.
How to refinance a home loan
- Know your current mortgage: Record the vital stats of your mortgage, like your current interest rate and monthly repayment amount, fees and charges, and a rough estimate of how much the loan will cost you over its life—Canstar’s mortgage repayment calculator could help here.
It could also be helpful to know how much equity you have and whether your current lender will charge any break or discharge fees (and if you’d save enough by refinancing to justify break fees) if you do decide to swap loans or lenders. - Research home loan rates: You can use the comparison table above to compare refinance home loans on our database. The tool allows you to see what loans are on offer in your state or territory, their advertised interest and comparison rates, and a calculation of what the monthly repayments on each of them could be.
- Compare your loan to what’s on offer: Now you have information in hand, weigh up your loan against what’s available on the market. Perhaps there’s a lower interest rate or better features on offer from a different lender, or maybe your lender has dropped its rates for new borrowers? Either way, carefully consider the options available, remembering that while a low rate could be beneficial, the comparison rate and other features and benefits should also be considered. Canstar’s expert Star Ratings and Awards could help you create a shortlist of loans and lenders too.
- Ask your lender for a better deal: It’s often worth negotiating with your existing lender before applying to refinance, as it might give you a better rate or special benefits to keep your business.
- Refinance to a new loan: Found a loan product you want to refinance to? You’ll need to apply through the lender offering it. You might also need to get your home valued. Aside from that, most of the complex refinancing work will be taken care of by your new lender, and it will reach out to you if it needs anything more.
When is a good time to refinance a home loan?
It may never feel like the “perfect time” to refinance, but considering your current loan and scouting for a better deal could be a good place to start. Depending on your circumstances, you may consider refinancing when:
- You find a more competitive interest rate. Some experts suggest that refinancing is best done when you can recoup related costs within a year thanks to realised savings.
- Your fixed loan term has come to an end. Fixed rate loans typically revert to a standard variable rate at the end of the term, making it easier and often cheaper to refinance then.
- The cash rate changes. This is often a sign that your variable rate could go up or down in the near future. Typically, if the cash rate goes up, lenders will lift their variable rates, which means your repayments could be adjusted upwards, too.
- Your introductory rate period ends. Some lenders offer ‘honeymoon’ or introductory rates for a certain period of time on their variable rate loans. If you’re nearing the end of this term, it could pay to check what the ‘revert rate’ is. This is the rate you’ll be charged after the introductory rate ends, and can be significantly higher.
- You want more flexibility or greater certainty. If you’re looking to pay down your loan quicker, you might want to refinance to a home loan with features like offset accounts or redraw facilities. Perhaps you want to change from a variable to a fixed rate loan, so you have a better idea of your repayments for a period of time, like during a period of extended parental leave.
- You want to access your equity. If you’ve paid a reasonable amount of your loan off, or the value of your home has increased, you may decide to refinance to take advantage of your equity in order to finance a purchase like buying an investment property or shares, or to do some renovations on your home. However, assuming your interest rate and fees remain the same, your home loan repayments would increase, as would the total cost of paying off the loan compared to keeping your existing one. And watch out for situations where you could enter into ‘negative equity’, where your loan is worth more than what your home could sell for.
- Your financial situation changes. If you’ve recently obtained a higher-paying job or changed from a single-income to a dual-income family, you could be offered a lower interest rate or better loan features from certain lenders. Some banks even offer special deals to people who do certain jobs, like doctors, lawyers, and teachers.
- You’re facing financial hardship. You may find that refinancing to a longer term (in exchange for paying more for your loan in the long run) and a lower interest rate may help you contain living costs in the short term. It could be a good idea to speak to a qualified financial counsellor about the possible benefits and risks of refinancing when facing financial hardship.
When is it not worth refinancing your home loan?
In certain circumstances, you might not find value in refinancing:
- You already have a competitive rate
- You’ve successfully negotiated a lower rate or better terms with your current lender
- Your LVR is above 80% (meaning you may need to pay LMI) and you only have a small amount of equity built up in your home
- You can’t meet a new lender’s serviceability requirements
- The fees for switching outweigh the potential savings (this can often be the case if you’re on a fixed rate)
- You’re close to paying off your loan
- You’re thinking of selling your home soon
What questions should you ask your lender before refinancing your home loan?
It’s usually worth contacting your current lender before refinancing and asking it to review your home loan. This gives it a chance to negotiate to try and keep your business, which could save you the time and cost associated with refinancing.
Some questions you might want to ask are:
- Do I currently hold your most competitive mortgage product?
- Can you match an offer from another lender?
- What can you offer me to keep me as a customer?
- What would you charge me to close my mortgage if I were to refinance?
