Should I Refinance? A Step-by-Step Guide

Refinancing your home loan — switching from your current lender to a new one — can save thousands. But it's not always the right move. Here's how to work through the decision systematically.

Step 1: Check What You're Currently Paying

Log into your lender's app or call them and confirm your current interest rate, remaining loan balance, remaining loan term, and what type of loan you're on (variable, fixed, split). Many Australians are on higher rates than they realise, particularly if they haven't reviewed their loan in 2+ years.

Step 2: See What's Available

Compare your current rate against what's being offered to new customers. You can do this via comparison websites, by calling a mortgage broker (free service — they're paid by lenders), or by checking lender websites directly. As of April 2026, competitive variable rates for owner-occupiers start around 5.80%.

Step 3: Calculate Your Break-Even

Refinancing involves costs — typically $1,000-3,000 in total (discharge fees, application fees, valuation). Use our Refinancing Break-Even Calculator to see how long it takes for the monthly savings to offset the switching costs. If break-even is under 12 months, it's usually a clear win.

Step 4: Check Your Equity

If your property value has dropped or you have less than 20% equity, you may need to pay Lenders Mortgage Insurance (LMI) again — which can add thousands to the cost. Get a property valuation estimate before applying. Some lenders will do a free upfront valuation to assess your application.

Step 5: Consider Features, Not Just Rate

The cheapest rate isn't always the best loan. Consider whether you need an offset account (can save significant interest if you maintain a balance), redraw facility, the ability to make extra repayments without penalty, and flexible repayment options (fortnightly, weekly). Some ultra-low rate loans are "no frills" and lack these features.

Step 6: Try Your Current Lender First

Before going through the full refinancing process, call your current lender's retention team and tell them you're considering refinancing. Many lenders will match or come close to competing rates to retain you — without any switching costs. This is often the fastest way to save money.

When NOT to Refinance

• You're on a fixed rate with high break costs (these can be tens of thousands — always get the exact figure from your lender before deciding)
• Your equity is below 20% and you'd need to pay LMI again
• You're planning to sell within 6-12 months
• The rate difference is less than 0.3% and you have a relatively small loan balance
• You've recently changed jobs or your income has dropped — new lenders require stable income evidence