Refinance Home Loan Rates
Refinancing means replacing your current home loan with a new one, either with your existing lender or a different one, usually to get a better rate, access new features, or release equity. Whether it’s worth doing comes down to running the actual numbers, not just the headline rate difference.
When refinancing typically makes sense
- A meaningfully better rate is available. A small rate difference may not outweigh the costs of switching, run the comparison on your actual loan balance and remaining term.
- You want features your current loan doesn’t offer. An offset account, redraw, or more flexible repayment options might justify a switch even at a similar rate.
- You’re consolidating debt or releasing equity. Refinancing can combine other debts into your mortgage at a lower rate than those debts carry individually, or free up equity for a renovation or investment.
- Your fixed term is ending. This is a natural, cost-free point to shop around before your loan reverts to a standard variable rate.
Costs that eat into the benefit
- Discharge fees from your current lender for closing out the loan
- Break costs, if you’re refinancing out of a fixed rate before the term ends, these can be substantial
- Application and valuation fees on the new loan
- LMI again, if your LVR has changed unfavourably or you’re borrowing a higher amount against the same property
The break-even calculation
Add up the total cost of refinancing (discharge fees, break costs, new application fees), then work out your monthly saving from the new rate. Dividing total cost by monthly saving gives you a rough break-even point, in months, how long you’d need to stay in the loan before the switch pays for itself. If you’re planning to sell or refinance again within that window, the switch may not be worth it.
Negotiating with your current lender first
Before refinancing elsewhere, it’s often worth asking your current lender to match or beat a competitor’s rate. Lenders frequently have retention offers available that aren’t advertised, and this avoids discharge fees and paperwork entirely if it works.
FAQ
Costs vary by lender and loan type, but commonly include a discharge fee from your current lender, an application or valuation fee on the new loan, and government registration fees. Break costs apply only if you’re exiting a fixed rate early.
It depends on your loan balance, remaining term, and the total switching costs. A small rate difference on a large, long-remaining loan can still be worth it, run the break-even calculation before deciding either way.
Yes, but you’ll likely face a break cost for exiting the fixed term early, which can be significant depending on how much rates have moved since you fixed. Waiting until your fixed term ends avoids this cost entirely.