Refinancing your home loan
Refinancing means replacing your current home loan with a new one, either with your existing lender or a different one. Done for the right reasons it can lower repayments or unlock useful features. Done on a headline rate alone it can quietly cost you. This guide covers how to tell the difference.
Last updated July 2026Reasons people refinance
- A lower interest rate, to reduce repayments or pay the loan off faster.
- Better features, such as an offset account, free redraw or the ability to make extra repayments.
- Debt consolidation, folding higher interest debts into the home loan, which lowers the rate but can extend the term and total interest.
- Accessing equity, for renovations or another purpose, which increases the loan.
- Moving off a fixed rate that is ending, or leaving a lender whose service has slipped.
Look past the headline rate
The advertised rate is only part of the story. The comparison rate folds most fees into a single percentage so you can compare loans more fairly, though it is based on a standard example and may not match your loan size or term. Always weigh the rate against the fees and the features you will use.
| Feature | What it means | Why it matters |
|---|---|---|
| Comparison rate | Rate plus most standard fees, shown as one figure | A fairer way to compare than the headline rate alone |
| Offset account | A transaction account linked to the loan | Every dollar in it reduces the balance interest is charged on |
| Redraw | Access to extra repayments you have made | Flexibility, though conditions and limits vary |
| Break or exit costs | Fees to leave, especially on fixed loans | Can wipe out the savings from switching |
Run the switch numbers
Before switching, estimate the full picture, not just the monthly saving:
- Find your new repayment at the new rate and compare it to today.
- Add up the switch costs, such as discharge fees, new loan fees, valuation and any fixed rate break cost.
- Work out the break even point, the number of months of savings needed to cover those costs.
- Check the loan term. Refinancing back to a fresh 30 year term lowers repayments but can raise total interest, so compare like for like where you can.
A rough guide: if you will hold the loan well past the break even point and the features genuinely help you, refinancing often makes sense. If you might sell or refinance again soon, the switch costs can outweigh a small rate gain.
How offset can beat extra rate shopping
An offset account can be quietly powerful. If you keep a meaningful balance in it, the interest saved can rival chasing a slightly lower rate, while keeping your money available. It only helps if you actually maintain a balance, so be honest about your cash flow. The budget planner can show whether you have a surplus to park there.
Frequently asked questions
How much of a rate drop makes refinancing worth it?
There is no fixed threshold. What matters is whether the ongoing saving clears the switch costs within a reasonable time and whether you will keep the loan long enough to benefit.
Will refinancing hurt my credit?
A new application creates a credit enquiry, and several applications in a short window can look like shopping around. Doing your homework first, then applying once, keeps this tidy.
Can I refinance with the same lender?
Sometimes. Asking your current lender to match a better offer, often called repricing, can achieve a similar result with less paperwork. It is worth a call before you switch away.
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Master Mortgage Broker Sydney is an independent education website. It is not a mortgage broker, does not arrange loans and does not provide financial or credit advice. Content here is general in nature and does not consider your personal objectives, situation or needs. Always confirm details with a licensed professional before acting.