Everything you need to know about refinancing your home loan

Updated 07/11/2023

There’s a variety of reasons why you might want to refinance your home loan. Here’s what you need to know about refinancing and how to do it.

What's the best way to compare mortgage refinance rates in 2023?

With a year and a half of rising interest rates that are still predicted to go higher, refinancing your home loan is becoming a necessity.

It's the smartest, fastest way to lower your repayments and give yourself some breathing room because no one really knows how high interest rates will go - although plenty of analysts think they're likely to stay high, or move even higher, in the coming months.

It's why we've put together this guide to help you keep your repayments as low as they can be. From working with a broker to understanding why some lenders are less likely to offer you a loan today versus 2021, we have it all covered.

And if you already know what you want, get in touch with Compare Club's expert brokers.

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Key Points

  • Review your home loan options regularly to avoid the risk of overpaying on your mortgage.

  • You don’t have to stay with your current lender when refinancing – in fact, a competitor may offer you a much better rate.

  • The costs of refinancing can include exit fees and break costs if you're leaving a fixed interest rate early - but this may still be worth your while as the revert rates ramp ever higher.

  • You can refinance directly with your lender, although most home loans are taken out via a broker, who can often access rates and products that aren't available to retail banking customers.

What does refinancing a mortgage mean?

Refinancing isn't about your home - it's about your home loan. If you've had the same loan with the same lender for a while, you may have noticed your repayments have risen sharply in the past year and a half.

And if you locked in a fixed interest rate in recent years, you've almost certainly noticed that your repayments will be much, much larger in 2023 when your fixed rate expires.

So what is refinancing? Quite simply, you take your home loan and move it to a different loan product and/or another lender.

This might mean looking for a new fixed rate product if you want to safeguard yourself from further rate increases, or you may want a loan with features your current home loan doesn't offer, such as an offset or redraw account or the ability to make extra repayments whenever you can to increase your buffer.

Most mortgage holders switch their home loans every 4-5 years for owners, or every 2-3 years for investment properties, because the lower your repayments, the faster you can pay off your loan.

Do I have to switch banks to refinance?

No. It's possible to change your loan product and remain with the same lender. In many cases, refinancing to another lender can get you a better home loan deal. However, it’s not uncommon to refinance your home loan with the same financial provider. Find out more: Compare Club broker Sophie Matthews shares her secrets on how to negotiate with your current lender.

When should I refinance my mortgage?

We recommend reviewing your home loan every time interest rates hit the headlines. At the moment, this is happening NOW.

This is because every time interest rates make news, banks come out with new offers that can make a difference to your household budget. Staying with the same loan and lender means you could be paying a lot more for your mortgage than you need to. Use our refinancing calculator to work out how much you could save.

Some reasons why you might want to refinance your mortgage payments include:

  • Your interest rate is much higher than before, and you want a better deal.

  • You want to switch from a variable rate loan to a fixed rate loan, or get a split rate home loan.

  • Your fixed rate has ended and your new interest rate (also called a revert rate) seems too high.

  • You're unhappy with your current lender.

  • Your plans for extensions or renovations to your home mean you need to borrow more money.

  • You want to consolidate other debts (like your credit cards) and roll them into your mortgage.

  • Refinancing after retirement.


Disclaimer: The results from this calculator should be treated as a guide only and is not a prediction or professional financial advice and should not be relied on as true indication of home repayment, or quotes or pre-qualifications for any loan. You should consider getting advice from a licensed finance professional before making any financial decision.

Results are based on information you have provided and do not take any of your personal circumstances into account. Using this calculator does not guarantee you will be eligible for a loan. You will need to satisfy your lender's lending criteria.

Compare Club accepts no responsibility for any losses arising from any use of or reliance upon any calculations or conclusions reached using the calculator.

Information such as interest rates quoted, and default figures, and formulae used in the assumptions are subject to change without notice.

Is refinancing easier than getting a mortgage?

In most circumstances, yes. This is because when you refinance your home loan, you've already purchased your property. Your lender has most of your relevant financial information, and they have a record of your repayments.

If you've owned your home for a several years, you'll have likely built up some equity. This tends to make refinancing easier. When you refinance, you're generally asking to borrow against a smaller portion of your home's overall value.

Some lenders have recently introduced 'fast track' refinances, which are smoother and easier to qualify for than if you're applying for your very first home loan.

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Should I refinance my mortgage or make extra home loan repayments?

This depends on your individual circumstances.

If you already have a home loan that includes an offset or a redraw account, you'll be able to use this to help pay your loan down faster, or to assist you in building up a buffer against future living cost price shocks - including any interest rate increases. Find out more: Compare Club's guide to Offset and Redraw accounts.

Make sure you read the fine print on your loan contract as there are usually penalties for making extra repayments too often, as during a fixed-interest period.

Refinancing can be a good option to help you pay off your home loan faster as well. 

If you find an interest rate that's lower than what you're currently paying, you may be able to continue paying the same amount every month. This should pay off your home loan faster because of the lower interest rate than you had for your previous mortgage.

What is a good mortgage refinance rate?

There aren't usually different interest rates specifically for refinancing your home loan. What is often offered, is a competitive interest rate or package to attract you, as you're a high value borrower who's proven you can repay your home loan.

Refinanced home loans can sometimes be handled more quickly because of this, and some lenders have started offering a fast track refinance process where you won't have to jump through nearly as many hoops as a new home loan applicant would.

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What are the pros and cons of refinancing?

It’s important that you consider your current financial needs before making a switch and refinancing. Here are some of the pros and cons to factor into your decision:


  • You may be able to lock in a lower interest rate than your current home loan, making your repayments more manageable.

  • You can reduce your loan terms, such as going from a 30 year loan to a 20 year loan.

  • Depending on your current lender, you might be able to leverage the equity you’ve built up over the years to reduce your interest rate or lower your loan amount (and therefore your repayments).

  • You have more flexibility to choose your ideal lender, loan type, amount and length when you refinance because you have a proven track record of managing your previous loan well.


  • Depending on your current interest rate, your savings may be minimal – especially when you factor in the fees for refinancing.

  • If your equity is less than 20% of your property's value, you may have to take out Lenders Mortgage Insurance (LMI), which can add to your loan amount.

  • You will get credit checked for every refinance application you make. If this negatively impacts your credit score, it can affect your ability to take out a loan in the future.

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What can a mortgage broker do for me when I refinance?

Just like taking out your very first home loan, a mortgage broker is a helpful source of information when refinancing. They know what most of the lenders are offering and will be able to give you home loan options that match your specific needs.

They'll also have access to any fast track refinance programs. Your broker will know which ones best suit your circumstances

However, you can do it yourself if you know exactly what you want, and you can use an easy online comparison tool to make your decision. 

By comparing and switching home loans with Compare Club, for example, you'll get access to products from more than 50 lenders to find the right loan to suit you. 

When I refinance my home loan, should I switch or stay?

Again, this depends on your specific circumstances and what you want to get out of your home loan.

If you're happy with your current lender, you may want to stay with them. However, bear in mind that they may not give you the best possible rate for refinancing, especially if you've just come off your low fixed interest rate.

It pays to find out what other lenders are offering. You never know – you might find a much better deal with a lender who provides exceptional customer service as well. 

If you're adamant about sticking with your current lender, ask them to match some of the other offers in the market.

What is the standard refinancing process?

Once you've made your decision to refinance, it’s time to compare home loans and find the right deal for you.

Look for things like a lower interest rate than the one you're currently paying, flexibility in the loan terms, lower, less or no fees, the length of your new loan term, and whatever else is most relevant to your needs.

Once you’ve chosen what you want – whether it’s with your current lender or a different one – your new lender will pay out the loan from your old lender with some or all of the funds from your new loan.

It’s not a complicated process on your end, as the two lenders will manage the terms of transferring the debt and property title. However, the whole process can take approximately two to four weeks to complete.

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Will I have to pay lenders mortgage insurance (LMI)?

Your new bank will have your property valued as part of your refinance application process. If your current loan is more than 80% of the value of your property, your new lender may require you to take out lenders mortgage insurance.

This can be a sticking point for some homeowners and is definitely something to discuss with your broker. Make sure you understand the financial implications of refinancing before making the switch.

How much can I save on my mortgage by refinancing?

Use a mortgage switching calculator to work out how much you'll end up saving when you refinance. Remember to factor in any fees – such as the termination of your current loan, application fees for your new mortgage, any valuation fees charged by new lenders, and any ongoing fees for your new home loan.

Let’s say you still have $500,000^ to pay off from your home loan and you want to refinance.

Example of savings made by refinancing your 30 year, $500,000 loan:

Old Loan (30 years)

New Loan (25 years remaining)

7.5% interest rate

6.0% interest rate

Repayment: $3,695

Repayment: $3,222

Monthly Saving: $473

Savings over 25 years: $142,000^+

In the example above, you'll save more than $5,676^ in the first year of your new loan. Note that this doesn't take into account that your interest rate will most likely change in subsequent years, but it helps illustrate just how effective it is to switch to a better interest rate when possible.

How do I find the best refinancing rates?

There are a number of ways you can go about mortgage refinancing. You might want to compare different lenders yourself, although this can be a time-consuming process. Alternatively you can use a mortgage broker.

You can start your hassle-free refinancing process quickly with Compare Club. We scour home loan products from over 50 different lenders and can show you exactly how much you’ll save over the life of your new loan. It only takes two minutes and you can get started right now.

If you’re ready to start saving by refinancing, you can start comparing home loans today with Compare Club.

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This guide is opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.

^Numbers referenced from MoneySmart Mortgage Switching Calculator, accessed 28 June 2023.

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Anthony Stevenson, is the head of home loans at Compare Club. With over a decade of experience under his belt, Anthony is dedicated to helping individuals make informed decisions when choosing a home loan. Whether it's finding the best deals on your home loan or refinancing, Anthony has a wealth of knowledge in the space.

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Anthony Stevenson

Head of Home Loans