Update note: Policy settings, rates and lender offers can change. Treat this article as general information and confirm current details before making a finance decision.
If you've been on your current home loan for more than a year, there's a good chance your lender isn't offering you their best rate. Here's how to decide whether refinancing makes sense in the current environment.
The Cost of Staying Put
Lenders typically offer their most competitive rates to new customers — a strategy known as "new money pricing." Existing customers often remain on older, higher-rate products. Over a 30-year loan term, even a 0.5% rate difference can cost you $40,000-$60,000+ in extra interest.
When Refinancing Makes Sense
1. You Can Save on Interest
The most obvious reason to refinance is if you can secure a lower rate. But it's not just about the headline rate — compare the comparison rate, which includes fees and charges.
2. You Need Better Features
An offset account can save thousands in interest by reducing the principal on which interest is calculated. If your current loan doesn't have one, refinancing to a lender that offers a full offset could be worthwhile.
3. You Want to Access Equity
If your property has increased in value, you may have equity to access for renovations, debt consolidation, or a deposit on your next investment property.
4. Your Fixed Term Has Ended
If you're on a fixed rate that's just expired and your lender has moved you to their standard variable rate (which is often significantly higher), refinancing can get you back to competitive pricing quickly.
The Costs of Refinancing
Before switching, factor in these costs:
- Exit fees / early exit charges: Usually $0-$400 if you're past your fixed term
- Application fees: Many lenders waive these for refinancing
- Valuation fees: Often free for refinancing, but can be $300-$500
- Settlement fees: Usually $200-$400
The Break-Even Test: Divide your total refinancing costs by your monthly savings. If the break-even period is less than 12-18 months, refinancing may be worth considering.
What to Look for in a New Loan
- Competitive rate: Not just the lowest — find the best value for your situation
- Offset account: Full offset (not partial) saves more interest
- Unlimited redraw: Access extra repayments whenever you need them
- No ongoing fees: Many competitive loans have zero annual fees
- Cashback offer: $1,500-$3,000 cashback can offset initial costs
The Broker Advantage
When refinancing, working with a mortgage broker helps you compare more than one lender's products. We factor in fees, features, incentives and lender policy so you can make a clearer decision.
Curious whether switching could work for you? Our free refinancing assessment helps you weigh the potential savings against the costs of moving lenders.