Home Loan
Mortgage Refinancing

Refinancing with your current lender vs switching to a new one

Asking your current lender for a better rate is a repricing, not a true refinance. No new application, no valuation, no settlement. The downside is the existing-customer rate is usually 0.10% to 0.30% above the new-to-bank rate, because they are betting on inertia. See how to avoid the loyalty tax that builds up over time. The fix is to use a written offer from a competing lender as a match-or-lose request. Repricing succeeds about 30% of the time on owner-occupier loans. The rest go to a full refinance.

When should you refinance your home loan?

The right time is when the savings or structural benefit clearly outweighs the cost of switching.

Six signs your current home loan is no longer working for you

Is the “2% rule” relevant in Australia?

The “2% rule” online (refinance only if you can drop your rate by two percentage points) is American. It does not apply here. Our switching costs are far lower than US closing costs, and cashback campaigns often cover the switch outright. The right Australian test is a break-even calculation. We work this out on every file, and the threshold is often well under 0.50%.

How much does it cost to refinance a home loan in Australia?

Total refinance costs in NSW for a standard owner-occupier or investment property typically land between $600 and $1,000 all in, before any cashback. For the full fee-by-fee breakdown with worked totals by loan size, see the full cost of refinancing, itemised.

Itemised refinance costs (discharge, application, valuation, settlement, NSW transfer of mortgage)

NSW Land Registry Services charges $175.70 for the discharge of the old mortgage and $175.70 to register the new one, totalling $351.40 in state fees on every NSW refinance. These figures are based on rates effective 1 July 2025, sourced from NSW Land Registry Services, and update annually each 1 July.

Big-four discharge fees in 2026 are $350 with Commonwealth Bank, Westpac, and NAB, and around $320 with ANZ (two $160 unbundled fees). Smaller lenders often charge less, and some online lenders waive the discharge fee on owner-occupier loans.

You do not pay NSW transfer duty (stamp duty) when you refinance. Transfer duty only applies on a change of ownership, and NSW abolished mortgage duty on 1 July 2016.

Refinance cost worked examples: $250K, $500K, $750K loan

Costs do not scale much with loan size, because almost all line items are flat fees. Cashback eligibility tiers are the main thing that changes.

Cashback in 2026 is mostly mutuals and non-banks. Major banks have largely stepped back from cashback offers through the broker channel. Cashback is never the sole reason to switch. Best Interests Duty requires us to weigh it against rate, fees, and total cost over the loan term.

Break costs on a fixed-rate loan

Exiting a fixed rate before the term ends can trigger a break cost covering the lender’s funding shortfall. Break costs only apply when wholesale rates have fallen since you fixed. In a rising-rate environment, many borrowers on legacy fixes face minimal or zero break costs. Always ask your current lender for a written break-cost quote before you decide.

How to calculate the break-even point on a refinance

The break-even calculation tells you how many months of savings it takes to recover the cost of switching.

The break-even formula (with $500,000 worked example)

Break-even months = Total switching costs ÷ Monthly savings

Take a $500,000 owner-occupier variable loan with 25 years remaining. Current rate 6.50%, new offer 5.95%, both principal-and-interest.

Without cashback, $700 ÷ $170 = roughly four months. Cumulative saving on $170 a month over 25 years is more than $51,000. Run your own numbers using our loan repayment calculator. We do this on every file and send you the working.

As a general rule of thumb, if it takes less than 12 months to recoup the one-off switching costs, it is potentially worthwhile refinancing.

When cashback offers tip the maths

A $3,000 cashback against $700 in switching costs gives a $2,300 head start before the rate savings begin. The catch is the fine print. Cashback usually requires an LVR threshold (70% or 80%), a minimum loan size (up to $700,000), principal-and-interest only, and a 12-month hold or the cashback is clawed back. Our refinance cashback offers page tracks active offers and conditions.

How to refinance your home loan: 6-step process

A typical refinance settles in three to six weeks, or three to four with a broker managing it.

Step 1: Review your current loan and equity position

Pull your loan statement and a property value benchmark. Work out balance, remaining term, current rate, and LVR. Our LVR explained article runs through the calculation, and the LVR calculator does the maths. Below 80% LVR you get the sharpest rates. Between 80% and 90% you can still refinance but expect to pay LMI again, because LMI is not transferable.

Step 2: Compare offers across lenders (don’t just ask your bank)

Get rate quotes from at least four or five lenders across a major bank, a second-tier, a non-bank, and a credit union. Look at advertised rate, comparison rate, cashback, ongoing fees, and offset or redraw. The cheapest advertised rate is rarely the cheapest total cost. Going direct, you compare two or three offers at most before credit enquiries pile up. A broker takes one application to the right lender across the full panel.

Step 3: Run the break-even and pick the loan

If the break-even is under one year on a property you intend to keep, the maths supports the switch. More than two years, push your current lender for a rate match instead.

Step 4: Submit application with documents

The new lender needs your last two payslips, three months of bank statements, your current loan statement, a property value benchmark, ID, and a payout figure from your old lender. The file usually goes in within 48 hours of signing the broker authority.

Step 5: Property valuation and unconditional approval

Most owner-occupier refinances under 80% LVR get a desktop or kerbside valuation in 24 to 48 hours. Above 80% or on complex properties, a full inspection takes a week. Once valuation and serviceability clear, the lender issues unconditional approval.

Step 6: Settlement and discharge

On settlement day, the new lender’s funds clear, the old loan is paid out, the discharge is registered with NSW Land Registry Services, and the new mortgage is registered against the title via PEXA. Your first new-loan repayment is usually one calendar month later.

Refinance home loan rates and cashback offers (April 2026)

Owner-occupier variable rates from major lenders in April 2026 run from around 5.75% to 6.40% on principal-and-interest, with the sharpest rates on digital-only products. Comparison rates run a touch higher. Investment loans run 0.20% to 0.40% above owner-occupier.

What “best refinance home loan rates” really means (advertised rate vs comparison rate)

The advertised rate is the headline. The comparison rate factors in the headline plus most fees and charges as an annualised percentage. Australian law (NCCP Act section 160) requires lenders to display the comparison rate at equal prominence to the advertised rate, because a low headline paired with high fees often costs more than a higher headline with no fees. The comparison rate references a $150,000 loan over 25 years, rarely your actual loan, so use it as a relative signal.

WARNING: Comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate.

How current cashback offers stack up against a lower ongoing rate

A $3,000 cashback is worth less over a 25-year loan than a 0.20% rate cut on a $500,000 loan, which saves around $61 a month, $730 a year, or $18,000 over 25 years. Cashback is one-off. If two lenders match on rate and only one offers cashback, take the cashback. If one offers cashback and a slightly higher rate, the answer depends on how long you intend to hold. We model both on every file.

Refinancing scenarios we handle

Refinancing to a lower variable or fixed rate

The simplest case. We compare rate, comparison rate, offset and redraw, and cashback across the full panel. If your bank will match, we tell you. If not, we run the switch.

Refinancing to access equity (renovation, investment, debt consolidation)

A cash-out refinance lets you draw a lump sum from equity. Lenders allow up to 80% LVR cash-out for owner-occupier purposes (renovation, investment, or debt consolidation home loan clearance). The rate matches a standard refinance, but the lender wants a stated purpose and may need contracts or quotes.

Refinancing a low-doc or self-employed loan

Self-employed borrowers often refinance every two to three years as their financials evolve. A low-doc refinance does not need full tax returns but does require accountant letters, BAS, or business statements. Rates sit 0.20% to 0.50% above standard, with an 80% LVR cap. See our low-doc home loan options page.

Refinancing out of bad credit or specialist lending

Borrowers who took out a specialist loan often move back to mainstream lenders once their credit profile clears, usually two to three years after the original event. We run the eligibility check first. See our bad credit home loan options page.

Disadvantages and risks of refinancing

• Break-even too long. $1,000 in switching costs at $30 a month saving is 33 months. Sell or refinance again before then and you have lost money.
• Term reset. A fresh 30-year term in year five adds five years of interest. Check whether the new lender preserves the remaining term.
• Loss of features. Some refinances drop the offset, redraw, or splits.
• LMI again. Above 80% LVR, expect LMI. LMI is not transferable.
• Cashback clawback. Some lenders require a 12-month hold.
• Credit file. Multiple enquiries inside six months reduce borrowing capacity.
• Hidden ongoing fees. A $395 annual package fee can wipe out a 0.10% rate saving on a smaller loan.

Refinances we walk away from outnumber the ones we run by about three to one, because most clients are better off pushing their current lender for a rate match first.

What lenders look for when you refinance (serviceability and equity)

Two checks govern every refinance approval.

Serviceability is the income-vs-repayments test. The lender takes your verifiable net income, subtracts living expenses and existing debt repayments, and applies a stress rate. APRA-regulated banks must add a 3 percentage-point buffer above the loan rate (reaffirmed July 2025), so a 6.00% loan tests at 9.00%. Non-bank lenders, which APRA does not regulate, often use a 1 to 2 percentage point buffer. A borrower turned away by a major bank can sometimes qualify with a non-bank using a smaller buffer. That gap is one of the structural reasons a broker matters. Use our borrowing power calculator for a starting estimate.

Equity is the LVR test. The lender wants the new loan no more than 80% of the property’s current value. Above 80% triggers LMI. Run the LVR calculator using a conservative property value before you apply, since the lender’s independent valuation is rarely as optimistic as a real-estate appraisal.

The 1% buffer refinance policy: how some major banks lift your borrowing capacity

The standard APRA buffer is 3 percentage points, but several major lenders run a special refinance assessment policy that drops the buffer to 1 percentage point for eligible refinances. Lenders publishing a version of this policy include Commonwealth Bank, Westpac, NAB, Bankwest, and St George. It is one of the most useful tools in a broker’s kit, and most borrowers do not know it exists.

The eligibility criteria vary by lender, but the common requirements line up:

Why it matters. A borrower who took a loan with a third-tier lender 12 to 24 months ago, often at a higher rate because of tighter policy at the time, has likely built a clean record. The 3% buffer at a mainstream bank may say they no longer service the same loan amount. The 1% buffer changes the answer. We have moved borrowers from a non-bank back to a major lender on a sharper rate the same week the standard 3% test failed.

The same logic applies if you have shopped around and been told you do not service the loan at a non-bank. You may still service it at a major bank under their 1% refinance policy, with the LVR and clean conduct boxes ticked. Send us the file and we will run it.

Why use a mortgage broker to refinance instead of going direct

We have been doing this since 2001. Send us your current loan statement and the property address, and we will come back inside 48 hours with a written break-even, a recommended lender, and a clear yes or no. See also first home buyers loans, construction home loans, and guarantor home loans.