Refinancing in Australia: A Concise Guide
What it is
A home loan refinance replaces your current mortgage with a new one, either with the same lender or a different lender. Common reasons include reducing interest costs, changing loan features such as offset or redraw, adjusting the loan term, or accessing equity. The process usually involves reviewing your current loan, comparing options, applying, lender assessment including a valuation, and settlement where the new loan pays out the old one.
Rate context
Australia moved from record-low rates in 2020–21 to sharp increases through 2022–23, followed by a pause in 2024 and modest easing in 2025. Rates are below their peak, but they remain materially higher than pandemic-era lows. This is especially relevant for borrowers coming off fixed rate mortgages, as many are now moving onto much higher variable rates.
Key considerations
Serviceability: Higher assessment buffers can make switching lenders harder.
Costs: Discharge, application, valuation and, for early fixed exits, break costs should be weighed against any savings.
Loan term: Resetting to 30 years may reduce repayments but can increase total interest over time.
Equity/LVR: Less than 20% equity may trigger lender’s mortgage insurance on the new loan.
Fix vs variable: Fixed loans offer repayment certainty, variable loans offer flexibility, and split loans combine both.
Practical options
- Negotiate with your current lender: Ask for a retention discount before switching.
- Compare beyond the headline rate: Review offset, redraw, extra repayments, fees and comparison rates.
- Choose an appropriate structure: Consider variable, fixed or split options based on your budget and comfort with rate changes.
- Use a refinance mortgage broker: A broker can help compare lenders and streamline the application process.
- Stress-test your budget: Assess whether repayments remain manageable under different rate scenarios and build buffers where possible.
If you are evaluating refinancing in Australia, especially as an owner-occupier or while coming off a fixed rate, book a free home loan health check with Key Finance. We can compare lenders, outline the costs and benefits, and explain variable, fixed and split options in plain English.
Important
This information is general in nature and does not take your personal circumstances into account. Seek professional guidance before making financial decisions.
