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This is when you take out a new home loan to replace your current loan, usually with a different bank. You might do this to take advantage of additional benefits, like a lower interest rate or a more convenient repayment plan. There might be extra benefits like a refinance cashback offer.

With interest rates on the rise, there’s never been a better time for Australians to refinance to a home loan with a better interest rate or move to a new provider with fewer fees.

When it comes to refinancing home loans, some of the most common reasons are to:

1. Save money with a better interest rate or reduced fees

Refinancing is an opportunity to potentially find a home loan with a more suitable interest rate. A lower interest rate could save you thousands of dollars over the lifetime of the loan.

2. Shorten (or extend) your loan term

Switching to a home loan with a lower interest rate can also potentially help you pay off your home loan sooner. If you get a better interest rate and continue to make the same monthly repayments as you did on your old home loan, you’ll shorten the term of your loan.

3. Consolidate multiple debts into one, easy-to-pay package

If you have more than one loan, refinancing can make it easier to manage your repayments. Depending on your circumstances, you may be able to consolidate your multiple debts into one home loan.

4. Free up equity for a new purchase

By refinancing your home loan, you can gain access to your home equity. This may be appealing if you are looking to renovate your home, purchase a second property or go on a dream holiday.

When refinancing your home loan, it's important to consider all your expenses, including not only the more obvious upfront costs, but also the ongoing costs. 

Upfront costs: 

• Exit fees - otherwise called discharge fees 
• Break fees - otherwise called mortgage deregistration fees 
• Start-up/ new home loan application fees
• Lender's mortgage insurance - insurance that credit providers take out to protect themselves should the loan not be repaid 
• Stamp duty - when refinancing you may be liable to pay stamp duty.  
• Settlement fees

Ongoing costs: 

• New monthly home loan repayments 
• Direct debits - when switching lenders remember to update any existing direct debits. 

Not always.  You’ll need to check that any benefits, such as lower interest rates and cashback offers, outweigh any additional fees you’ll have to pay to complete the process. It’s important to do your research so you’re not caught off guard by application fees, valuation fees, registration fees or settlement fees.  If you have less than 20% equity in your property, you may also have to pay Lenders Mortgage Insurance.

Our home loan specialists can help you understand the big picture if you’re thinking about refinancing.

Compared to the first time you applied for your home loan, refinancing your home loan is a much easier process. Our home loan specialists can help guide you through these steps.

1. Assess your financial situation

Before you start the refinancing process, take stock of your current financial situation. Consider if the timing is right and if you can comfortably pay back your home loan.

2. Compare home loan options

There are a few decisions you will need to make, such as whether you would like a fixed rate loan or you’d prefer a variable rate. Look carefully at the products and services attached to each option. For example, can you link your new home loan to an offset account or redraw facility? We can help explain these options.

3. Submit your application

Once you’re ready to apply you can choose whether you’d like to do this online, visit your local branch or give us a call to chat to our home loan experts.

4. Complete your documentation

We’ll guide you through the necessary information and documentation you need to complete your loan application.

5. If approved, sign your new loan contract

Once your loan has been approved, we’ll get in touch with your current lender to organise paying back your old loan.