Time to read : 5 Minutes

The RBA cut the cash rate last month, and many lenders lowered interest rates accordingly. When rates start moving, it’s a clear sign you should be making some moves as well – but like many other financial decisions you may need to make, where do you start?

As a former mortgage broker, I’m going to help point you in the right direction.

Why 2025 might be the year to make all the moves

If you felt like 2024 was a bit quiet on the refinancing front, you weren’t imagining things. According to property settlement giant PEXA, Aussies refinanced 372,502 mortgages valued at roughly $215 billion last year. Sounds like a lot, right? But it was actually down 17.6% from the previous year which translates to approximately 438,062 completed refinances in 2023.

But 2025 might be a different story. Why? There are three major reasons:

• Reserve Bank of Australia (RBA) cash rate cuts: when the RBA lowers the cash rate, mortgage interest rates usually drop as well – and this is what happened in February.

💡 More cuts are possible later in 2025 as well – so if the RBA drops the rate and your lender doesn’t cut yours, call your mortgage broker immediately

• Lender inconsistency: not all lenders react the same way to the RBA cash rate cuts. Some pass on the savings, others… not so much. That’s when borrowers get antsy and switch.

• High interest rates trapped some borrowers in expensive fixed rate loans. With rates coming down again, these homeowners finally have a chance to refinance. (If this sounds like you, keep reading.)

Should you refinance your home loan?

One thing to clear up is that refinancing isn’t always the best move. Talk to your broker if the following circumstances sound familiar:

• You’re on a fixed rate. Breaking your contract could cost more in fees than you’d save, but if you’re near the end of your fixed rate term, do the maths and check. You can also ask your broker to do this for you.

• If your Loan-to-Value Ratio (LVR) is over 80% you might have to pay Lender’s Mortgage Insurance (LMI) again. (Not sure what these are? Learn more about LVR and LMI.) 

• Your finances have changed. New job? New spending habits? Lenders might see you as a risk.

• You just took out your loan. Establishment fees and early exit penalties could outweigh any savings. 

With all the above to consider, here’s a 5-step breakdown of the refinancing process.

Step 1: Knowing why you want to refinance

Before you dive in, ask yourself: What’s my goal? Lenders will want to know this too. 

Some common reasons to refinance could include:

• Lower interest rates – because who doesn’t love paying less?

• Reducing monthly repayments means less financial stress, and maybe more smashed avo brunches.

• Paying off your home loan faster. Switching to a lower rate but keeping your repayments the same can shave years off your loan.

• Accessing your home equity – because refinancing can unlock extra cash you can reallocate to other things, like a holiday or home renovations.

• Consolidating debt. Rolling multiple debts into your mortgage can make life simpler, and you can make cash flow savings by doing this.

Step 2: Getting a reality check (aka where are you now, loan-wise?)

Once you know why you want to refinance, it’s time to assess your current loan. 

Here are the key things to compare:

Interest rate and comparison rate 

Don’t just be seduced by the headline rate. Look for the comparison rate – this factors in all fees and other charges, giving you the real cost of your loan over time. 

Be aware: a loan with the same interest rate, but a higher comparison rate, will cost you more over time.

Loan features

Do you need an offset account, redraw facilities, or flexible repayment options? Consider the features you’d like for your loan.

Loan term and fees

Check for exit fees from your current loan, any new establishment costs, and sneaky charges. You’ll be surprised how much these can all add up. 

New lenders may be able to waive some of these fees – but they’re likely to wait for you to ask. A savvy mortgage broker can often help with this.

Your Loan-to-value ratio

When was the last time your property was valued? Your LVR may have changed from when you first took out your loan. If your LVR is above 80%, you might have to pay LMI again. Ouch! If it’s below 80%, you could get an even better interest rate.

Step 3: Ask your lender if they can offer you more (yes, really)

Before you go through the effort of switching lenders, try negotiating with your current one. They might offer you a better rate just to keep your business.

Here’s when lenders are more likely to say ‘yes’:

• Your financial situation has improved (eg you’ve paid down your loan, lowering your LVR).

• Competitors are offering significantly better rates.

• You’re a long-term customer with a good repayment history.

And if they say ‘no’? Time to move on.

Step 4: Should you call in the experts?

You have two options: do it alone or use a mortgage broker. 

Both have pros and cons:

Option 1: The DIY Approach

• Full control over the process (hello, financial empowerment).

• More research and paperwork for you to keep on top of.

• No insider knowledge or negotiating power.

Option 2: Using a Mortgage Broker

• Brokers do the legwork, comparing deals from multiple lenders.

• They handle negotiations and tricky paperwork, taking the headache out of renegotiating.

• They’re legally required to act in your best interest.

• They know the market and often have access to rates you wouldn’t find by yourself.

Step 5: Gather your paperwork (annoying but essential)

Getting organised early makes the process smoother and quicker. Lenders love paperwork. Here’s what you’ll need:

• Proof of identity – passport, driver’s license, or birth certificate.

• Proof of income – bank statements, payslips (from the past 3–6 months), or tax returns if self-employed.

• Financial situation – records of living expenses, outstanding debts, and assets like shares or super.

Bottom line

For many home owners, refinancing can mean serious savings, lower repayments, and a better loan structure. But it’s not a one-size-fits-all solution. Always do your homework before jumping ship. 

Negotiate with your current lender first. Weigh up the pros and cons of going solo versus using a mortgage broker. Importantly, make sure your refinancing costs don’t outweigh your benefits.

If done right, refinancing can be a game-changer. If done wrong, well… let’s just say you might end up in a bureaucratic nightmare with zero savings to show for it.

So, take your time, compare your options, and make the decision that’s right for you.

Go deeper: 

• Should I reduce loan repayments if my bank cuts interest rates?

• Seven ways to leverage the equity in your home

Financial disclaimer

The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.