Property · Home loan refinancing
A lower rate is not automatically a better deal.
Refinancing pays out your current home loan with a new one. Everybody looks at the rate. What decides whether you actually come out ahead is the cost of switching and the length of the new loan — because resetting your remaining term back to thirty years can cost more in total interest than the rate saving ever returns. We will show you both numbers before you move anything.
Start here
What refinancing actually does.
A refinance is a new home loan that pays out the old one. Your existing lender is discharged, its mortgage over the property released, and the new lender registers its own in its place. Nothing about the house changes. What changes is who holds the debt, what it costs, and — the part that gets missed — how long you have left to repay it.
An external refinance moves the loan to a different lender: full application, valuation, settlement. An internal refinance restructures with the lender you already have — faster and cheaper, but limited to what that one lender offers. Plenty of people assume they need the first when the second would have done the job.
- A lower rate. The most common reason and the most oversold. Worth doing when the saving survives the switching costs and you hold the term steady.
- A different structure. Fixed to variable or back again, a proper offset account, splitting the loan, or leaving a package whose annual fee no longer earns its keep.
- Equity release. Borrowing more than you owe and taking the difference as cash.
- Consolidating other debts. Rolling a car loan, personal loan or card balances into the mortgage — covered further down, because it deserves more than a line.
Say you took a thirty-year loan and you are seven years in. Refinance onto a fresh thirty-year term and you have just handed back seven years of progress. A lower rate spread over a longer period can easily cost more in total than a higher rate over the years you had left: the repayment falls, which feels like a win every month, while the lifetime cost quietly rises. You can avoid it entirely by asking for the new loan over your remaining term, or by keeping repayments at the old level once the minimum drops. Nobody at the new lender will suggest either. Ask for it.
The real arithmetic
What it costs to switch.
None of these are enormous on their own. Together they set the bar the rate saving has to clear before you are genuinely in front.
| Cost | Who charges it | When it applies |
|---|---|---|
| Discharge fee | Existing lender | Almost always, for closing the loan and releasing the mortgage. |
| Break cost | Existing lender | Only inside a fixed-rate period. Not a set fee — it is calculated from how wholesale rates have moved since you fixed, and it can be trivial or large enough to wipe out the entire reason for switching. Get it in writing first. |
| Application or establishment fee | New lender | Common, though often waived on a refinance. Worth asking rather than assuming. |
| Valuation fee | New lender | Frequently absorbed on a straightforward refinance, charged where a full inspection is needed. |
| Settlement and legal fees | New lender | For preparing documents and running settlement between the two lenders. |
| Government registration | State land titles office | Discharging the old mortgage and registering the new one. Set by the state, not negotiable. |
| Lenders mortgage insurance | New lender | Where your equity sits below what the new lender requires. LMI already paid is not transferable between lenders, so this is a real risk of paying twice — and the item most likely to make a refinance not worth doing. |
| Ongoing package fee | New lender | Annual fee on package products. Excellent value if you use the offset and waivers it bundles, dead weight if you do not. |
Cashback incentives sit alongside all of this. A payment for bringing your loan across is real money, but it is a one-off against a rate you may hold for years. Compare the ongoing cost first and treat the cashback as a tiebreaker.
When only a few years remain, so the saving on a shrinking balance has nothing to recover the costs from. When the rate gap is narrow on a modest balance. When a fixed-rate break cost exceeds the benefit. When you are about to sell. And when your income has changed since you first borrowed — a refinance is a fresh assessment, and you may no longer qualify for the loan you already hold. Better to learn that from us than from a decline on your credit file.
The assessment
What a lender looks at.
Income and expenses today
Verified again from payslips, statements and tax returns. If you have moved to self-employment, gone part-time, taken parental leave or added dependants since you first borrowed, the picture is not the one the original approval was based on.
The property and its value
The lender orders its own valuation, and that figure drives your equity, your pricing and whether mortgage insurance enters the picture. It is the variable you control least.
Conduct and commitments
Repayment history on the current loan, your credit file, other debts, card limits — the limit counts whether you use it or not — and recent applications. Boring, clean conduct counts for a lot here.
Think hard about this one
Rolling other debts into the mortgage.
The pitch is easy to like: a car loan, a personal loan and a couple of card balances disappear into the home loan, and the total monthly outgoing drops noticeably. That part is true.
Here is the rest. Home loan rates are the lowest available precisely because the debt is secured against your house — so you have converted unsecured debt into secured debt. Falling behind on a personal loan is serious. Falling behind on a mortgage puts the roof at risk. That trade is worth making sometimes. It is never worth making casually.
The second problem is the term, and it bites harder here than anywhere. A car loan with four years left, absorbed into a mortgage with twenty-six to run, is now a twenty-six-year debt. At a much lower rate over six times the period, the total interest on that car can end up well above what finishing the original loan would have cost. The monthly figure improves; the lifetime figure gets worse.
There is a version we are comfortable recommending: consolidate if the cash flow relief is genuinely needed, then deliberately lift your mortgage repayment by roughly what the old repayments were, so the consolidated portion clears over something close to its original timeframe. That works. Letting it ride for the life of the loan is what turns a sensible move into an expensive one.
And the honest caveat — consolidating does nothing about why the debts built up. If the cards refill over the following year, you have the cards back and a bigger mortgage.
Cash out and valuations
Releasing equity, and why the valuation may disappoint.
Equity release means borrowing more than your current balance and taking the difference in cash. Your equity is the gap between what the property is worth and what you owe, and lenders will generally lend against part of that gap rather than all of it.
Expect to be asked what the money is for, and expect the answer to matter. Lenders assess a cash-out request against its purpose, and the evidence they want generally increases with the amount. A renovation backed by a builder's quote, a deposit on another property, funds for a business — all ordinary requests, all treated differently from one another, and some needing documents rather than a description. Vague answers slow applications down more than anything else. If you know what the funds are for, say so plainly and bring the paperwork.
Then there is the valuation, where refinances most often come unstuck. The valuer is instructed by the lender and works for the lender, arriving at a figure it could defend if things went badly. The exercise is structurally conservative, so a number below what you expected is common:
- Comparable sales, not listings. Valuers work from what has actually settled nearby and recently. Asking prices and online estimates are not evidence, and settled figures lag a rising market.
- Renovations do not return dollar for dollar. A new kitchen lifts value, but rarely by what it cost, and highly personal work can add less again. Landscaping and pools are routinely valued well under the invoice.
- The valuation type differs. Some refinances are assessed by desktop or automated valuation rather than a physical inspection. Those lean cautious by design.
- Your property is hard to compare. Apartments in large buildings, rural holdings and unusual layouts are harder to benchmark, and uncertainty pushes a figure down rather than up.
If it comes back low you can ask for a review and supply genuine comparable sales, reduce the amount you are seeking, or try another lender — valuations are not uniform across the market. What you should not do is quietly accept a shortfall that pushes you into paying mortgage insurance again without anyone explaining what just happened.
How it works
Three steps.
Send us the current loan
Balance, rate, lender, years remaining, and whether any part is fixed. A recent statement covers most of it.
We compare total cost
Rate, fees, structure and term modelled against staying where you are — including what your current lender might do if asked. We check policy before anything is lodged.
Application to settlement
Valuation, approval, documents, and the coordination between outgoing and incoming lenders. One broker who chases the discharge so you do not have to.
Common questions
Refinancing, answered.
How much lower does the rate need to be before it is worth switching?
There is no threshold that holds for everyone, and anyone quoting you one is guessing. It depends on your balance, your remaining term and your total switching costs. The same rate difference can be well worth having on a large balance with decades to run and pointless on a small balance a few years from the end. The answer is arithmetic on your actual numbers: total cost of staying against total cost of switching, over the years you have left.
Does refinancing restart my loan term?
By default, usually yes, and it is the most expensive detail on this page. A new loan is typically written over a new full term unless you ask otherwise, which hands back the years you had already paid down. Two fixes work: ask for the new loan to be set over your remaining term, or take the longer term for the lower minimum but keep paying what you pay now so the extra goes to the balance. Decide it deliberately rather than letting the default happen to you.
How long does a refinance take?
Longer than most people expect, and it varies with the lenders involved. There are moving parts a purchase does not have: the incoming lender assesses and approves, a valuation is completed, documents are signed and returned, and then your existing lender has to process the discharge and settle. That last step is outside everyone's control but your current lender's, and it is usually where the wait sits. Having your documents ready early is the part you can influence.
Can I refinance while I am on a fixed rate?
You can, but get the break cost figure before deciding anything. Breaking a fixed loan triggers an economic cost reflecting how wholesale rates have moved since you fixed. It is calculated on the day rather than set in advance, so depending on which way rates went it can be minor or large enough to swallow the entire benefit of switching. Ask your lender for it in writing, and note it is only valid briefly. If your fixed period ends soon, waiting it out is often cheaper.
Should I roll my car loan and credit cards into the mortgage?
Only with your eyes open. It lowers your monthly outgoings and usually the rate applied, which genuinely helps when cash flow is tight. It also converts unsecured debt into debt secured against your home, and stretches short-term debt across the remaining decades of a mortgage, which can cost far more in total interest than finishing those loans on their original terms. If you do it, commit to paying the consolidated portion down at roughly the old repayment level rather than letting it ride.
Can I take cash out, and what will the lender want to know?
Often yes, if you have the equity and the servicing supports a larger loan. Expect to be asked what the funds are for, because lenders assess the purpose as part of the application and the evidence required generally rises with the amount. Renovations, a deposit on another property and business purposes are all ordinary requests, treated differently from each other, and some need supporting documents rather than a description. The fastest applications state the purpose plainly at the start with the paperwork attached.
What if the valuation comes in lower than I expected?
It happens regularly and it is not the end of the process. A lower figure means less equity, which can change your pricing, reduce what you can borrow, or bring mortgage insurance into play. You can ask for a review and provide genuine comparable settled sales, reduce the amount you are seeking, or try a different lender, since valuations vary. What matters is understanding what the number changed before you sign, rather than discovering it at settlement.
Should I just ask my current lender for a better rate first?
Honestly, yes. It is free, it takes one phone call, and lenders often reprice for an existing customer who asks — no application, no valuation, no discharge. If that closes the gap, staying is the sensible outcome and we will tell you so. Where repricing falls short is that it only moves the rate: it cannot restructure your loan, release equity, consolidate other debts or move you to a product that suits you better. Knowing what the wider market offers is also what makes that phone call productive.
Let's talk
Send us your current loan. We will tell you whether to move it.
No cost, no obligation, and no credit enquiry recorded while we work it out. If switching leaves you better off over the years you have left, we will find the sharpest option on our panel and run it to settlement. If it does not, we will say so and tell you what to ask your own lender instead.
What to have ready
Not all of it to start a conversation — only to finish one.
Ready to go? Start an application, or call and we will work through it on the phone.
The Finance Team is the trading name of Online Showroom Pty Ltd and holds Australian Credit Licence 551493. We act as a credit broker rather than a lender. Nothing on this page is an offer of credit or a recommendation to borrow, and any rates, repayments or costs discussed with you are estimates for illustration only. Every application is subject to assessment and approval by the lender.