How to Refinance Your Home Loan in Australia (Step-by-Step Guide)

Refinancing your mortgage can cut monthly repayments, access equity, or shorten loan terms. This 2025 guide shows you when to refinance, the steps involved, and the pitfalls to avoid.

Refinancing in 2025: a strategic move, not just a lower rate chase.

What does refinancing mean?

Refinancing is replacing your current mortgage with a new one, usually with a different lender or on new terms. It’s common in Australia because interest rates, property values, and personal circumstances change over time.

Top reasons Australians refinance in 2025

• Lower interest rates: Save money on repayments.
• Access equity: Unlock funds for renovations, investment, or debt consolidation.
• Loan features: Switch to offset accounts, redraw, or flexible repayment options.
• Shorten term: Pay off your home loan faster.

Mortgage brokers can simplify comparisons across lenders.

Step-by-step refinancing process

1. Review your current loan: Check balance, interest rate, features, and fees.
2. Clarify your goals: Lower repayments, cash out, or shorten term?
3. Check your credit score: Good credit improves offers.
4. Compare lenders: Use brokers, comparison sites, or bank offers.
5. Calculate costs: Include exit fees, break fees (for fixed loans), new application fees, valuation fees, LMI.
6. Apply and get approval: Provide payslips, bank statements, property details.
7. Settlement: Your new lender pays out the old loan. Repayments switch.

Costs to watch for

• Discharge or exit fee (few hundred dollars).
• Break costs if on a fixed-rate loan.
• Application, valuation, settlement fees with the new lender.
• Lender’s Mortgage Insurance (if borrowing >80% LVR again).

Warning: Saving 0.25% on rate may not justify refinancing if fees eat up the benefit. Run a 3–5 year breakeven analysis.

Pros and cons of refinancing

• Pros: Lower rate, better features, flexibility, access to equity.
• Cons: Costs, paperwork, risk of resetting loan term, possible higher LVR or LMI.

Always compare savings vs upfront costs before refinancing.

FAQs

How often should you refinance?

Every 2–3 years, or when your interest rate is more than 0.5% above market average.

Does refinancing hurt your credit score?

A single application has a small impact, but multiple applications in a short time can reduce your score.

Can you refinance if you’re self-employed?

Yes, but you’ll need at least two years of tax returns and financial statements.

Next steps

1. Get a payout figure from your current lender. 2. Compare at least 3–5 refinance offers. 3. Calculate fees vs savings over 3–5 years. 4. Apply only once you see net benefit.

Compare refinance offers (Australia)

Disclosure: This article provides general information only, not financial advice. Check with a licensed mortgage broker or lender for tailored advice. Affiliate links may earn commissions at no cost to you.

Updated: 8 August 2025 • Location focus: Australia