When Should You Refinance Your Home Loan?

Your home loan is likely the biggest financial commitment of your life. So it makes sense to review it regularly and ensure you’re still getting a competitive deal. Refinancing — switching your loan to a new lender or product — can save significant money, but it also comes with costs that need to be weighed carefully.

Signs It’s Time to Refinance

1. Your Rate is No Longer Competitive

Interest rates move constantly. If your rate is more than 0.5% above the current market rate, you could be leaving real money on the table. Even a 0.5% reduction on a $600,000 loan saves roughly $3,000 per year.

2. You’ve Built Significant Equity

Once you hold more than 20% equity, you may qualify for better rates and can avoid LMI. This often happens naturally as property values rise and you pay down your loan.

3. Your Financial Situation Has Improved

A higher salary, better credit score, or lower debt-to-income ratio may mean you now qualify for lender products you didn’t previously. Your loyalty is rarely rewarded — new customers often get better deals.

4. You Want Different Loan Features

Maybe you want an offset account to reduce interest, a redraw facility for flexibility, or the ability to make extra repayments without penalty. If your current loan doesn’t offer these, refinancing might be worth considering.

5. You Want to Access Equity

Refinancing lets you unlock equity built in your property for renovations, investment, education, or other goals.

When NOT to Refinance

You Recently Fixed Your Rate

Breaking a fixed-rate loan can trigger break costs that may outweigh any savings from switching. Always calculate the break cost before proceeding.

Your Loan Balance is Small

Refinancing costs — including application fees, valuation fees, and discharge fees — can range from $500 to $2,000+. If your loan balance is small, the savings may not justify these costs.

You’re Close to Paying Off Your Loan

In the early years of a loan, you pay mostly interest. If you’re in the final years, most of your repayment goes to principal. Refinancing resets this, and you’ll pay more interest over time.

Your Credit Score Has Declined

If your credit history has worsened since your original loan, you may not qualify for competitive rates — or any loan at all.

How to Calculate If Refinancing Is Worth It

Use this simple formula:

Monthly saving × months to break even = Upfront costs

If you save $200/month and refinancing costs $2,000, you’ll break even in 10 months. After that, every month is pure saving.

The Refinancing Process

1. Get a comparison rate — not just the headline rate
2. Calculate total costs — discharge fees, application fees, valuation costs
3. Check your current loan terms — any penalties for switching?
4. Apply for pre-approval — your broker handles this
5. Receive approval and settle — your new lender pays out your old one
6. Continue making repayments — to your new lender at the new rate

The process typically takes 3–4 weeks.

Let Us Do the Comparing

Our brokers compare products from 60+ lenders and do all the calculations for you. We’ll tell you honestly whether refinancing makes sense for your situation — and if it does, we’ll manage the entire process at no cost to you.