Is Refinancing Right for You?
Refinancing your mortgage can be a smart way to save money, access better loan features, or take control of your financial goals. But like any major decision, it comes with trade-offs. Here’s what you need to know before making the switch.
What is refinancing?
Refinancing is when you replace your existing mortgage with a new one — either with your current lender or a different one. You might refinance to get a lower interest rate, access home equity, consolidate other debts, or simply get better features like offset accounts or redraw facilities.
While refinancing can lead to big savings, it’s not always the best option for everyone. The key is to weigh the benefits against the potential costs and risks.
Why do people refinance?
Here are some of the most common reasons Australians choose to refinance their home loans:
- Lower interest rate: Even a small rate reduction could save you thousands over the life of your loan.
- Reduce monthly repayments: Switching to a lower rate or longer term may ease financial pressure.
- Access home equity: Use built-up equity for renovations, investments or big expenses.
- Consolidate debt: Combine multiple debts into your home loan to reduce interest and simplify repayments.
- Switch from fixed to variable (or vice versa): Depending on market conditions and personal goals.
- Loan features: Upgrade to a loan with offset accounts, redraw, or repayment flexibility.
What to watch out for!
Refinancing can save you money — but not always. Some costs and conditions can outweigh the benefits. It’s important to check:
- Break fees: If you’re on a fixed-rate loan, breaking it early could result in hefty charges.
- Upfront costs: Application, valuation, discharge and legal fees can add up, even if the new rate looks better.
- Loan term reset: Starting a new 30-year term might mean paying more interest over time — even if your monthly repayments drop.
- Honeymoon rates: Watch out for introductory rates that jump significantly after the first year.
- New lender requirements: Your financial situation will be reassessed, and approval isn’t guaranteed.
Tips before switching
Before you apply to refinance, make sure to:
- Use a calculator (like ours) to estimate your savings
- Ask for a loan key facts sheet to understand all costs
- Speak to a mortgage professional if you're unsure
Need help deciding?
Use our 60-second calculator to see if refinancing could work for you — with zero calls and zero pressure.
Try the Calculator