Refinance Your Home Loan & Save Thousands

When Should You Refinance Your Home Loan?

Many Australians set and forget their home loan, staying with the same lender for years or even decades while paying an uncompetitive rate. Banks count on this loyalty, often reserving their best rates for new customers while existing borrowers quietly pay more. Refinancing is the most effective way to reclaim those savings.

There are several clear signals that it is time to consider refinancing. If your fixed rate period is ending and you are about to revert to a much higher variable rate, refinancing before or at the end of that period can lock in a better deal. If interest rates have dropped since you took out your loan, you could be paying significantly more than necessary. And if your property has increased in value, you may now qualify for a lower LVR tier which attracts better rates.

Beyond rate savings, refinancing is also valuable when you want to access equity for renovations or investments, consolidate high-interest debts like credit cards and personal loans into your mortgage at a much lower rate, or change loan features such as adding an offset account or switching between fixed and variable.

Understanding Break Costs and Exit Fees

If you are currently on a fixed rate loan, breaking the fixed term early can trigger break costs. These are not penalties — they compensate the lender for the difference between your fixed rate and the prevailing wholesale rate for the remaining term. Break costs can range from a few hundred dollars if rates have risen, to tens of thousands if rates have fallen significantly since you fixed.

Variable rate loans do not have break costs, making them simpler and cheaper to refinance. The main costs for variable rate refinancing are the discharge fee from your current lender (typically $150-$400), government mortgage registration and deregistration fees ($150-$300), and potentially a valuation fee ($200-$600), though many lenders now offer free desktop valuations.

Since the abolition of exit fees on loans established after 1 July 2011, there are no deferred establishment fees or exit penalties on variable rate loans. For older loans, check with your current lender whether any legacy exit fees apply.

Cashback Offers and Refinancing Incentives

Competition among lenders has driven a wave of cashback offers aimed at attracting refinancers. These offers typically range from $2,000 to $4,000 and are credited to your loan or bank account shortly after settlement. Some lenders also waive application fees, valuation fees, and legal costs for refinancers.

While cashback offers are attractive, they should not be the sole reason to choose a lender. A lender offering $4,000 cashback but a rate 0.20% higher than the best available will cost you more in the long run. On a $500,000 loan, that 0.20% difference equals $1,000 per year — meaning the cashback advantage disappears after four years while the higher rate continues indefinitely.

We factor in cashback offers alongside rates, fees, features, and ongoing costs to present you with the true best-value option. Our analysis considers the total cost of the loan over the expected holding period, not just the headline rate.

Cash-Out Refinancing: Accessing Your Home Equity

Cash-out refinancing lets you tap into the equity you have built in your home. As property values rise and you pay down your mortgage, the gap between your property value and loan balance grows. This equity can be unlocked for purposes such as home renovations, investing in shares or additional property, funding education, or consolidating higher-interest debts.

Most lenders allow cash-out refinancing up to 80% LVR without Lenders Mortgage Insurance. For example, if your home is valued at $900,000 and you owe $350,000, you could potentially access up to $370,000 in equity ($900,000 x 80% - $350,000). The key consideration is that you are increasing your total debt, so ensure the purpose justifies the additional borrowing.

If you are using the equity for investment purposes, the interest on the additional borrowing may be tax-deductible. However, it is important to keep the investment portion separate from your personal mortgage for clean tax reporting. We can structure your refinance with a split loan to achieve this.

Debt Consolidation Through Refinancing

Rolling high-interest debts into your home loan through refinancing can dramatically reduce your monthly repayments and total interest paid. Credit cards typically charge 18-22% interest, personal loans 8-14%, and car loans 6-10%, while a home loan might charge just 5.99-6.50%.

For example, if you have $30,000 in credit card debt at 20% and $20,000 in personal loans at 10%, you are paying approximately $8,000 per year in interest on those debts alone. Consolidating this $50,000 into your home loan at 6% reduces the interest cost to $3,000 per year — a saving of $5,000 annually.

The important caveat is that while your interest rate drops significantly, you are extending the repayment period by rolling short-term debt into a 30-year mortgage. We recommend maintaining higher repayments on the consolidated portion to clear it faster, and establishing a plan to avoid accumulating new unsecured debt.