Refinancing Home Loans

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Refinance Home Loans

What does it mean?

“Refinancing a home loan” is the term used when a homeowner swaps mortgages. In this scenario they could:

  • Stay with their lender but change home loan products, or
  • Go to a different lender, which takes over the existing mortgage

There are many reasons that homeowners may choose to refinance. Some of these include:

  • Saving money: Refinancing could help a borrower take advantage of a better deal, such as a lower interest rate, which could potentially save thousands of dollars off? the lifetime cost of a loan.
  • Borrowing more: It could be possible for some borrowers to change the conditions of their loan, such as increasing the amount borrowed, if they switch lenders.
  • Restructuring: It may be possible to, for example, move from principal-and-interest repayments to interest-only repayments.
  • Bundling: Moving all their banking business to a single financial institution could allow a borrower to access package deals or other perceived benefits.
  • Consolidating debts: In some circumstances, it may also be possible to consolidate multiple debts into the one home loan when refinancing. It could be wise to consider financial advice before doing so, however, as there can be risks associated with this.

Use the selector above to compare more than 4,000 home loan products from more than 100 lenders on Canstar’s database.

How to refinance a mortgage

There are a few ways that homeowners can approach refinancing, but it could be a good idea to start by working out what you’re paying at the moment, then doing some research into what interest rates are currently on offer in the market.

  1. Know your mortgage: Record the vital stats of your mortgage, such as what interest rate your lender is currently charging you, what your monthly repayments are, the loan’s fees and charges and a rough estimate of how much the loan will cost you over its life. A mortgage repayment calculator could help.  It could also be helpful to know how much equity you have. Conditions could differ depending on if the mortgage is on an investment property or a home you’re living in.
  2. Research home loan rates: Use Canstar’s home loan refinance comparison tool (at the top of this page) to compare loans on our database. The tool allows you to see what loans are on offer in your state or territory, their advertised interest rates and comparison rates, and a calculation of what the monthly repayments on each of them could be.
  3. Negotiate for a better deal: Now that you have a good picture of what is on offer in the market, it could be worth asking your existing lender if it can give you a better home loan interest rate, or offer any special benefits to keep your custom.
  4. Investigate other lenders: If you find a deal that’s worth exploring, you could approach that lender to find out more. Ask lots of questions – it’s important to understand the terms and conditions of any new financial product before applying for it or entering into a contract.

A low rate isn’t the only factor to consider when judging a loan. Other factors could play a part, such as if it comes with any features, such as an offset account or redraw facility, extra fees or similar considerations. Consider if you need to seek professional financial advice.

About Canstar

Canstar is Australia’s biggest financial comparison site, with more than 775 brands on our database^. That includes over 4,000 home loans from more than 100 lenders, helping you to compare a wide range of home loan interest rates in one place.

All rates are updated every business day as we aim to ensure you are viewing accurate, up-to-date data, whether you are buying your first home, refinancing or investing in property, looking for a great deal on a credit card, or trying to find the best savings account to suit your needs. Some rates listed may be promotional rates.

^ As of January, 2020. To be included in the count, a brand has to be able to be compared with another product from another brand on the tables on the site and we’re talking finance and Australia only.


Author: Nina Tovey

Nina is the Editor-in-Chief of Canstar, Australia’s biggest financial comparison site. She is responsible for leading the editorial strategy, and works with a team of journalists and SEO specialists to drive traffic through delivering compelling and insightful content to consumers looking for support with their finances. You can follow her on Instagram or Twitter.

Refinancing FAQs

A “refinance home loan” is a type of loan given to people who want to change the loan they have on a property to another mortgage product or another lender – or both. It is generally similar to other types of home loans, and can be available to both owner-occupiers and investors and offered as a variable-rate, fixed-rate or split-rate loan. It may also be possible to refinance other types of loans, such as personal loans and car loans (typically, fees and charges apply).

You can refinance with your current bank by asking for a better deal, or asking to change to a different type of loan. You can also refinance with a different lender (or via a mortgage broker), which means going through that lender’s application process. If your application is successful, the new lender typically will arrange for  the mortgage from the previous lender to be ‘discharged’ and transferred over. There could be fees and charges involved with refinancing.

Learn more: 

What does it cost to refinance a home loan?

What are break costs?

Whether or not it is good to refinance a mortgage depends on many factors, such as the conditions of your current mortgage, the deals and home loan rates available in the wider home loan marketplace at the time you’d like to refinance, and whether or not you can qualify for a new loan. However, in general terms, one possible outcome of refinancing a loan could be to reduce the cost of the loan. If that is the case, this could be a good thing if you are trying to balance your budget. It’s important, however, to fully understand all of the financial implications of refinancing, which could include extra fees or a longer loan term (which could make your loan more expensive overall), so it might be wise to consider financial advice before jumping in. 

Learn more:

Here’s how to switch home loans

When you refinance a home loan, your previous mortgage is typically discharged – or closed. The balance owing on the loan is transferred to the new loan (which could be with a new lender). You then begin paying off that loan under the terms and conditions of the new loan. This could mean a different repayment amount or method of payment.

The term “interest rate” means the amount of money you will have to pay or will receive from a bank, when you use one of its financial products. It is expressed as a percentage. When someone borrows money from a financial institution, the lender will charge interest on that loan – an extra amount of money the customer has to pay on top of their loan installments. It’s the main way banks make money from loans. Conversely, when someone deposits money in a bank, the bank will pay that customer a percentage of that money back in interest, depending on how long they keep those funds in that bank. It’s why people choose to put their money in a bank. Banks then use this deposited money to fund loans to other people, among other things.

Learn more about interest rates:

What is a Home Loan Comparison Rate?

How is interest calculated?

A good interest rate is one that is competitive against similar offerings from other institutions. Before committing to a financial product, it’s a good idea to not only consider the interest rate, but also the features and costs of the product. For example, when a customer takes out a loan, it can be a wise idea for them to ensure the loan includes features they want or need, such as the ability to pay extra to shorten the life of the loan or the ability to withdraw extra funds. For a savings account, it could be a wise idea to check the terms of withdrawal, and if the interest rate reverts to a lower rate after a certain period of time (known as a promotional rate).

Learn more about savings accounts: Who is offering the highest interest savings accounts?

Learn more about taking out a home loan: What to look for in a home loan

Comparison sites, such as Canstar, allow consumers to compare a large range of financial products that are on the market in Australia. Canstar has thousands of financial products listed on its database, including more than 4,000 home loan products from more than 100 lenders. To compare, go to canstar.com.au and select the type of financial product you’d like to compare – such as banking (including home loans, savings accounts and credit cards, to name a few), insurance (such as health, home and life insurance), investment (including superannuation and online share trading) and business products.

Use our comparison selectors by entering the information that applies to you, and then hitting the “compare” button. You will be presented with a list of products, which will typically be ordered according to one of their features, such as their Canstar Star Rating or applicable interest rates. You can change the order of the listed results by adjusting the settings at the top of the list, and change what is in the list via the filter function.

Learn more about Canstar

Important Information

1. This advice is general and has not taken into account your objectives, financial situation, or needs. It is not personal advice. Consider whether this advice is right for you, having regard to your own objectives, financial situation and needs. You may need financial advice from a suitably qualified adviser. Consider the product disclosure statement (PDS) before making any financial decision. For more information, read Canstar’s Financial Services and Credit Guide (FSCG), and read our detailed disclosure, important notes and liability disclaimer.

2. Canstar is an information provider and in giving you product information Canstar is not making any suggestion or recommendation about a particular credit product or loan. If you decide to apply for a credit product or loan, you will deal directly with a credit provider, and not with Canstar. Rates and product information should be confirmed with the relevant credit provider. For more information, read the credit provider’s key facts sheet and other applicable loan documentation for that product. Read the Comparison Rate Warning.

3. Before you elect to terminate or modify existing lending arrangements, it is recommended that you consider all associated fees and application costs, as well as the timing and impact these changes could have on your wider financial arrangements and personal circumstances.