Is now a good time to refinance your home loan?

• There’s no single “right time” to refinance. It depends on your goals and loan structure.

• Even a small rate difference can impact repayments, but fees and break costs matter.

• Refinancing can improve flexibility, reduce costs, or restructure debt when timed well.

• Use a clear framework to assess whether switching lenders may suit your situation.

Many borrowers review their home loan at different life stages. Some reassess when their fixed rate ends. Others review their loan after a pay rise, a new child, an investment purchase, or a renovation plan.

While market headlines often focus on rate movements, there is no universal “right time” to refinance. The decision depends less on where interest rates sit in a cycle and more on your personal circumstances, loan structure and long-term goals.

Refinancing involves replacing your current home loan with a new one, either with a different lender or, in some cases, renegotiating with your existing lender. It can change your interest rate, loan features, or repayment structure.

The key question isn’t: “Is now the right time for everyone?” 
It’s: “Does refinancing make sense for me?”

This guide outlines when refinancing may be worth considering, when it may not, and how to evaluate the decision step by step.

When does refinancing make sense?

Refinancing is typically driven by personal triggers rather than market timing. Below are some of the most common scenarios where borrowers review their loan.

Your interest rate is higher than comparable loans

Home loan rates can vary between lenders, even for similar borrower profiles.

If your current interest rate is noticeably higher than comparable options available in the market, it may be worth reviewing your loan.

However, the headline interest rate alone doesn’t tell the full story.

When comparing loans, consider:

• The comparison rate

• Ongoing fees

• Offset or redraw features

• Loan flexibility

• Total cost over time

A lower rate may reduce repayments, however switching costs must be factored in before drawing conclusions.

Your fixed rate is ending

When a fixed rate period expires, loans typically revert to the lender’s standard variable rate unless you take action.

Many borrowers begin reviewing their options two to three months before their fixed term ends.

This allows time to:

• Compare new fixed or variable options

• Assess current lender repricing

• Submit a refinance application if switching

If you’re considering exiting a fixed rate early, break costs may apply. These vary depending on loan balance, remaining term, and market conditions.

You might also be interested in: Refinancing a fixed rate mortgage

Your financial situation has changed

Changes in personal circumstances often prompt a loan review.

For example:

• An increase or decrease in income

• Starting or expanding a family

• Purchasing an investment property

• Consolidating higher-interest debt

• Funding renovations

Refinancing may allow you to adjust repayment structures, access equity, or restructure your loan to reflect current needs.

Serviceability will typically be reassessed during refinancing, so updated income and expenses will be considered.

You want more flexibility

Over time, your priorities may shift. Features that weren’t important when you first took out your loan may now matter more.

Borrowers sometimes refinance to access:

• An offset account

• A redraw facility

• The ability to split between fixed and variable

• A different repayment frequency

• More flexible repayment options

Loan features can influence both convenience and long-term costs.

You might also be interested in: Home loan redraw facilities explained

When refinancing might not be worth it

Refinancing isn’t always beneficial. In some cases, costs and circumstances may outweigh potential gains.

Break costs on fixed loans

Exiting a fixed rate loan before the term ends can trigger break costs.

These are calculated based on factors such as:

• Remaining loan balance

• Time left in the fixed term

• Interest rate movements

Depending on timing, break costs can be significant.

Lenders mortgage insurance (LMI)

If your loan-to-value ratio (LVR) is above 80% when refinancing, you may need to pay LMI again.

However, if your property value has increased or your loan balance has reduced, your LVR may now sit below 80%, which could change the requirement.

Each lender applies its own criteria.

You might also be interested in: What is LMI and how to avoid paying it

Small rate differences

A modest rate reduction may not always justify switching. The impact depends on your loan balance.

For example, if you owe $300,000 and reduce your interest rate by 0.20%, your annual interest saving may be limited. After accounting for fees and charges, it may take time to break even.

Running the numbers before switching can help determine whether refinancing aligns with your goals.

High switching fees

Refinancing can involve:

• Discharge fees

• Application fees

• Valuation fees

• Government registration fees

These costs vary by lender and state.

Short remaining loan term

If your loan has only a few years remaining, the potential benefit of refinancing may be smaller compared to the cost and effort involved.

What does it cost to refinance?

Refinancing costs vary depending on the lender and loan type.

Common costs may include:

• Discharge fee (charged by your current lender)

• Application or establishment fee (charged by new lender)

• Valuation fee

• Government registration or settlement fees

• Lenders mortgage insurance (if applicable)

• Break costs (if exiting a fixed rate early)

Before refinancing, it’s important to request a full cost breakdown.

You can also use a refinance calculator to estimate potential savings and assess whether switching may improve your position.

You might also be interested in: When and when not to refinance your home loan

How to work out if you’ll be better off

Rather than focusing on market timing, use a structured framework.

Step 1: Review your current loan

Check:

• Your interest rate and comparison rate

• Loan balance

• Remaining term

• Monthly repayments

• Features (offset, redraw, flexibility)

Step 2: Compare alternative options

Look at comparable loans and assess:

• Interest rates

• Fees

• Features

• LVR requirements

Use comparison rates where possible for a clearer cost view.

Step 3: Calculate total switching costs

Add up:

• Discharge fees

• Application fees

• Valuation fees

• Government fees

• Any break costs

Step 4: Estimate your break-even point

Break-even months = Total refinancing costs ÷ Monthly savings

For example:

If total costs equal $2,000 and monthly savings are $100, it would take approximately 20 months to recover the cost.

This calculation helps determine whether refinancing aligns with your time horizon.

Note: This is a simplified example and does not include tax or lender policy differences.

What’s involved in refinancing?

Refinancing generally involves the following steps:

1. Compare loan options

2. Submit application and documentation

3. Property valuation

4. Conditional approval

5. Settlement and discharge of existing loan

Timeframes vary by lender but commonly range from two to six weeks, depending on documentation and processing times. The “right time” to refinance depends on your personal circumstances, not a calendar year or headline rate.

Refinancing can improve cost, flexibility, or loan structure, but it should be assessed carefully against fees, break costs, and long-term goals.

If you’re unsure whether refinancing suits your situation, reviewing your loan with a broker can help you compare options and understand potential costs.

Book a free^ chat with an Aussie Broker to review your home loan and explore refinance options that align with your goals.

Frequently asked questions