Refinancing Home Loans: When and How to Refinance
Refinancing your home loan can be a clever way to reduce your repayments, access better features, or restructure your finances—but it only works if you approach it with the right plan. Whether you're a first-home buyer or a seasoned investor, this guide will help you make confident, informed decisions.
Getting started
In this comprehensive guide, we'll break down what refinancing involves, when it's the right move, how the process works, and what to look out for along the way. With expert guidance from experienced mortgage brokers, you'll learn to navigate the refinancing landscape with confidence.
Refinancing Benefits
Lower Interest Rates
Secure better rates and reduce your monthly repayments with competitive refinancing options.
Debt Consolidation
Combine multiple debts into one manageable repayment at a lower interest rate.
Access Home Equity
Unlock your property's value for renovations, investments, or major expenses.
Refinance Calculator
Calculate potential savings and compare loan options to make informed decisions.
What is Home Loan Refinancing?
Refinancing means replacing your current home loan with a new one. This could be with your existing lender or a different one altogether. People typically refinance to get a lower interest rate, change their loan features, consolidate debts, or adjust the loan term.
Refinancing vs Switching Lenders
There are two main types of refinancing:
Internal refinance: You stay with your current lender but switch to a different product or change the terms of your loan.
External refinance: You move your loan to a different lender who may offer better rates, features or service.
Either way, you're effectively closing out your old loan and opening a new one—ideally on terms that better suit your needs.
Why Do Australians Refinance?
Some common reasons for refinancing include:
- Securing a lower interest rate
- Consolidating multiple debts into one repayment
- Accessing equity for renovations, investment or large expenses
- Switching between fixed and variable rates
- Adding features like an offset account or redraw facility
Real Example: Alex from Brisbane refinanced from a 6.2% variable rate to a 5.4% fixed rate, saving $260 per month. Over two years, that's more than $6,000 in interest saved.
When Is the Right Time to Refinance?
Timing your refinance correctly can lead to significant savings. Here are key situations when it may make sense:
Interest Rates Have Dropped
If interest rates have fallen since you took out your loan, refinancing to a lower rate could reduce your repayments and save thousands over the life of your loan—even a 0.5% difference adds up.
Your Fixed Rate is Ending
When your fixed term expires, your loan usually reverts to a higher variable rate. That's a good time to shop around and secure a better deal before your repayments jump.
You Want to Consolidate Debt
If you're juggling multiple debts (like credit cards or personal loans), refinancing can allow you to consolidate them into your home loan—usually at a much lower interest rate.
Just be aware that spreading short-term debts over a longer loan term may cost more in the long run unless you make extra repayments.
You're Accessing Equity
If your property's value has increased, refinancing can help you tap into your home equity to fund renovations, investments or major expenses. This is also known as a cash-out refinance.
Look beyond the rate. Be sure to compare the comparison rate, which includes most fees and gives a more accurate picture of the loan's true cost.
How the Refinancing Process Works
While refinancing might seem complex, a broker can make the process much easier. Here's what the typical journey looks like:
Review Your Current Loan
Start by understanding your current loan:
- Your interest rate and comparison rate
- Loan balance and remaining term
- Features like an offset account or redraw
- Any exit or break fees
Compare Other Options
This is where a broker adds real value. At Stryve, we assess your goals and compare loans across multiple lenders to find the most suitable option—not just based on rate, but also on structure and flexibility.
Submit Your Application
Once you've chosen a new loan, you'll need to provide:
- Proof of income (e.g. payslips or tax returns)
- Statements for your current loan
- Recent bank statements
- Identification and other supporting documents
Get Approved and Settle
After your application is approved, your new lender will pay out your existing loan and take over. Settlement generally takes four to six weeks, depending on the complexity of your application.
Most refinances settle in 4–6 weeks from application to completion. Working with a broker can help avoid delays and reduce paperwork.
Costs and Risks to Consider
Refinancing isn't always free. While it can be worthwhile, it's important to weigh the costs before you switch.
Break Fees
If you refinance while still in a fixed-rate period, your current lender may charge a break fee. This can be significant, depending on your loan terms and how long is left on the fixed period.
New Lender Fees
These may include:
- Loan application fees
- Valuation or legal fees
- Settlement or discharge fees
- Ongoing account-keeping charges
Lenders Mortgage Insurance (LMI)
If your loan-to-value ratio (LVR) is above 80% after refinancing, you may have to pay LMI again—even if you paid it on your original loan. This can be a major expense, so it's worth checking with your broker.
Impact on Your Credit Score
Applying for a new loan involves a credit check. While this may cause a small dip in your credit score, the impact is usually short-term if your repayments remain on track.
Warning: Refinancing too often or for the wrong reasons can cost more than it saves. Consider the total cost—not just the advertised rate.
Benefits of Using a Mortgage Broker
Refinancing can be overwhelming without guidance. That's why many homeowners turn to mortgage brokers for help—especially when comparing a wide range of loans and lenders.
Access to Multiple Lenders
Unlike banks, brokers can offer you a broader selection of loan products from different lenders—some of which may not be available directly to consumers.
Expert Advice Tailored to You
No two borrowers are the same. A good broker (like the team at Stryve) will get to know your goals, run the numbers, and explain your options clearly—so you can make an informed decision.
Support From Start to Finish
We handle the paperwork, liaise with the lender, and follow up every step of the way—saving you time and stress.
Not sure where to start? Stryve offers free home loan health checks to help you explore your refinance options.
Real-Life Refinance Scenario
Meet Sarah, a homeowner in Sydney. Her three-year fixed loan was coming to an end, and her lender was preparing to switch her to a 6.8% variable rate.
With help from Stryve, Sarah refinanced to a new lender offering a 5.49% variable loan with an offset account. The result?
Before:
- Old monthly repayment: $3,050
- Interest rate: 6.8% variable
After:
- New monthly repayment: $2,790
- Interest rate: 5.49% variable + offset
- Annual savings: over $3,000
Frequently Asked Questions
Can I refinance if I'm on a fixed-rate loan?
Yes—but you may be charged a break fee. Ask your broker to calculate whether the savings outweigh the cost.
Will refinancing hurt my credit score?
There may be a minor dip due to the credit check, but it typically rebounds quickly—especially if you manage your new loan responsibly.
How soon can I refinance after getting a home loan?
Some lenders prefer at least 6–12 months of repayment history, but it's possible to refinance sooner in certain cases.
Do I have to stay with my current lender?
No—you're free to refinance with any lender who will approve your application.
Is refinancing worth it for just a 0.5% rate drop?
Often, yes. On a large loan, even a small rate drop can lead to meaningful savings over time.
Ready to Explore Your Refinance Options?
At Stryve, we help homeowners Australia-wide assess their loan, compare competitive options, and handle the refinance process from start to finish. If you're wondering whether it's the right time to switch, we're here to help you run the numbers and make the move with confidence.