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What is refinancing?

“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

Should you refinance your home loan?

There are many reasons homeowners may choose to refinance. Some of these could 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.
  • Adding features: You could switch to a loan with a wider range of features, such as an offset account or redraw facility.
  • 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.

What does it cost to refinance a home loan?

Refinancing can come with a range of costs. Some of the fees you may have to pay include:

  • Discharge fee: a fee charged by your current lender to pay out your existing loan.
  • Application fee: a fee charged by your new lender to make a new loan application.
  • Valuation fee: a fee charged by your new lender to determine your property’s current value.
  • Stamp duty fee: stamp duty may be payable, depending on your circumstances.
  • Lenders Mortgage Insurance (LMI): if you have less than 20% equity in your property, you may need to pay LMI.
  • Break fees: If you have a fixed rate home loan, you will likely need to pay a break fee if you decide to refinance during the fixed rate period.

The overall costs of refinancing will depend on your current lender, your new lender and which state or territory you live in.

How to refinance a home loan

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. It may also be useful to find out whether your current lender will charge any break or discharge fees if you do decide to swap loans or lenders.
  2. Research home loan rates: You can use Canstar’s home loan comparison tool 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 rates and comparison rates, and a calculation of what the monthly repayments on each of them could be.
  3. Compare your loan to what’s on offer: Now that you have the information in hand, it could be a good idea to weigh up your loan against what’s available in the wider market. Perhaps there’s a lower interest rate or better loan features on offer from a different lender, or maybe your lender has dropped its rates to new borrowers? Either way, consider carefully the options available (and remember, while a low rate could be beneficial, it is also important to consider the comparison rate as well as other features and benefits when comparing loans). Canstar’s expert star ratings could also assist you to create a shortlist of loans and lenders.
  4. Ask your lender for a better deal: It could be worth negotiating with your existing lender, to see if it can give you a better home loan interest rate, or if it can offer any special benefits to keep you as a customer. Ask if there are any costs involved in changing your loan. Compare your lender’s offer with your shortlist of other loans and lenders.
  5. 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, plus the fees, of any new financial product before applying for it or entering into a contract. It may be helpful to ask the lender to send you information about their offer, so you can take time to review it. Factor into any decision the impact of any costs associated with refinancing, such as if your current lender will charge you any break or discharge fees.

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, like an offset account or redraw facility, extra fees or similar considerations. Consider if you need to seek professional financial advice.

Compare Home Loans

Learn more:

Looking for a better deal? Here’s how to switch home loans
What does it cost to refinance a home loan?
What are break costs?
Latest home loan deals and offers
How to finance a renovation
Compare Investment Home Loans
Home Loans Directory

Last updated: 30/07/2021

Author: Nina Tovey

As Canstar’s Editor-in-Chief, Nina heads up a team of talented journalists committed to helping empower consumers to take greater control of their finances. Previously Nina founded her own agency where she provided content and communications support to clients around Australia for eight years. She also spent four years as the PR Manager for American Express Australia, and has worked at a Brisbane communications agency where she supported dozens of clients, including Sunsuper and Suncorp.

Nina has ghostwritten dozens of opinion pieces for publications including The Australian and has been interviewed on finance topics by the Herald Sun and the Sydney Morning Herald. When she’s not dreaming up ways to put a fresh spin on finance, she’s taking her own advice by trying to pay her house off as quickly as possible and raising two money-savvy kids.

Nina has a Bachelor of Journalism and a Bachelor of Arts with a double major in English Literature from the University of Queensland. She’s also an experienced presenter, and has hosted numerous events and YouTube series.

You can follow her on Instagram or Twitter, or Canstar on Facebook.

You can also read more about Canstar’s editorial team and our robust fact-checking process.

Refinancing FAQs

What is a refinance home loan?

A refinance home loan, also commonly known as a refi loan, is a type of loan for 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).

How do you refinance a home loan?

You can refinance with your current lender by 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, including discharge fees.

Is it “good” to refinance a home loan?

Whether or not it is a good idea 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 to make a switch. 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 is a good time to refinance a home loan?

It may never feel like the “perfect time” to refinance, however, a good place to start could be to consider your current loan and scout for a better deal. For example, depending on your circumstances, it might be a good time to refinance if you find a better interest rate. If you have a fixed rate home loan, another time to refinance could be when your fixed loan term is about to end. Fixed rate loans typically revert to a variable rate at the end of the term, so it could be worth comparing your options.

There is typically no cap on how many times you can refinance your home loan. However, it’s important to consider the overall fees and charges associated with refinancing. Applying for credit may also have an impact on your credit score.

What happens when you refinance your home loan?

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.

How long does it take to refinance a home loan?

How fast you can refinance your home loan will vary depending on the lender, the loan and your personal circumstances. In some cases, refinancing can take as little as a couple of days. In other cases, it can take over a month.

Remember, there are a number of steps involved in refinancing. This includes doing your research, applying for a new loan and getting approval. You may be able to speed up the refinancing process by getting all your paperwork ready before speaking to a lender. This includes things like proof of income documents, your current home loan statements and statements of any other debts, like personal loans and credit cards you have. The process may also be faster if you are refinancing with the same lender as they will already be aware of your finances.

What’s an interest rate?

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?

What’s a “good” interest rate?

A good interest rate could be considered as 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 comparison rate, features and costs of the product. For example, checking the loan includes features you want or need, such as the ability to pay extra to shorten the life of the loan or the ability to withdraw extra funds.

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

How do I compare interest rates on financial products?

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 5,000 home loan products from more than 80 lenders. To compare, go to and select the type of financial product you’d like to compare – such as refinance home loans.

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.