Refinance Home Loan, When It Makes Sense and How the Process Works
Quick answer. Refinancing means replacing your current home loan with a new one, either with a new lender or with your existing lender. It can make sense when your rate is no longer competitive, a fixed period is ending, or you want to access equity. The benefits need to outweigh the costs of switching.
Why it is worth reviewing your home loan in 2026
Rates have moved this year. Moneysmart reports that the RBA has increased the cash rate three times so far in 2026, in February, March and May. With rates changing, the gap between what you pay and what is available elsewhere can widen without you noticing, which is why a regular review matters.
Staying put can cost you. In its home loan price inquiry, the ACCC found many borrowers with older home loans were paying significantly higher interest rates than borrowers with newer loans. It recommended that lenders regularly prompt borrowers whose loans are older than three years to review their rate and consider switching.
When should you refinance your home loan?
• Your fixed rate period is ending. Your loan will usually move onto the lender's variable rate, which may not be competitive.
• You have not reviewed your rate in a few years. Your current lender may not be offering you its best rate.
• Your finances have improved. More equity or a stronger income can open up better options.
• You want to access equity. Sometimes called a cash out refinance, this can fund renovations or another property purchase.
• You want to consolidate debts. Rolling other debts into your home loan can simplify repayments, but spreading short term debt over the remaining life of a home loan can cost more overall unless you pay it down faster.
• You want different features. Such as an offset account or a change in loan structure.
When refinancing might not make sense
Refinancing is not always the right move. It may not pay off if break costs on a fixed loan are high, if you would need to pay LMI, or if the switching costs outweigh the benefit over the time you expect to hold the loan.
Watch the loan term too. Moneysmart warns you could end up with a longer loan than the years left on your current mortgage, and the longer the loan, the more interest you pay.
What does it cost to refinance a home loan? Fees to compare
Moneysmart lists these fees and charges to compare before switching.
| Cost | What it is |
|---|---|
| Break fee | May apply if you are on a fixed rate loan |
| Discharge fee | Charged when you close your current loan |
| Application fee | Upfront fee when you apply for a new loan |
| Switching fee | Charged when refinancing internally with your current lender |
| Stamp duty | You may be liable when you refinance, so check with your lender |
| LMI | May apply if you have less than 20% equity, and can outweigh the savings |
If you switch after paying LMI originally, Moneysmart suggests asking for a partial refund of the LMI on your current loan.
To check whether switching will save you money once fees are included, Moneysmart's mortgage switching calculator shows how long it would take to recover the cost of switching.
A good first step is to ask your current lender for a better deal. Tell them you are planning to switch, as they may reduce your rate to keep your business, then compare that offer against the wider market.
How refinancing works with a mortgage broker
1. Loan review. Your broker reviews your current rate, fees, features and any fixed rate break costs.
2. Market comparison. Your broker compares options across the lender panel, including your current lender's retention offer.
3. Cost check. Switching costs are weighed against the expected benefit, so the decision is based on the full picture.
4. Application. Your broker manages the application and the property valuation with the new lender.
5. Settlement. Your broker coordinates the discharge of your old loan so the switch happens smoothly.
Refinancing generally takes three to four weeks from application to settlement, though timing can vary depending on the lender and your circumstances.
Mortgage brokers are required to act in the best interests of consumers and to prioritise their interests when providing credit assistance.
Documents to have ready
• Photo identification
• Recent payslips or other income evidence
• Your most recent home loan statement
• Recent bank statements
• Statements for any debts you want to consolidate
• Your council rates notice or property details
SMSF refinancing, an often overlooked review
If your self managed super fund (SMSF) holds a property with a loan, that loan deserves a review too. SMSF loans are often set up once and then left alone.
SMSF borrowing is only allowed in limited circumstances, and the main exception is a limited recourse borrowing arrangement (LRBA). The rules changed in 2026. For LRBAs entered into on or after 10 August 2026, real property can only be purchased if it is business real property.
The key point for existing borrowers is that the change does not affect arrangements that existed before 10 August 2026, and it does not affect refinancing them. The ATO defines refinancing an LRBA as entering into a new loan contract for the same asset, with the same or a new lender. So if your fund already has a loan on a residential investment property, refinancing is still an option.
We currently work with the following lenders for SMSF refinancing. Granite, Pepper, Orde, RedZed, Thinktank, Brighten, Bluestone and Firstmac.
Because SMSF decisions sit inside your super, speak with your SMSF accountant or a licensed financial adviser before making any change.
Frequently asked questions
-
Regularly, and always when a fixed period is ending. The ACCC has recommended that borrowers with loans older than three years be prompted to review their rate.
-
Yes. That is an internal refinance, and a switching fee may apply.
-
It is a fee your current lender charges when you close your loan. Compare it alongside the new lender's application fee when working out whether switching is worth it.
-
You might, if you have less than 20% equity in your home. A broker can check this before you apply.
-
Yes. A broker compares options across a panel of lenders, weighs the switching costs against the expected benefit, and manages the process through to settlement. Brokers must act in your best interests when providing credit assistance.
-
A new loan application involves a credit check, which is recorded on your credit file. A broker can help you avoid unnecessary applications to multiple lenders.
-
Yes, for arrangements that existed before 10 August 2026. Refinancing those loans is not affected by the new rules. Get advice from your SMSF accountant or adviser first.
Talk to Neo Finance Group
Not sure whether your current loan is still competitive? Speak with our team for a review of your loan against the current market.
Sources
• Switching home loans, Moneysmart (ASIC), updated 29 July 2026
• Mortgage switching calculator, Moneysmart (ASIC)
• Home loan borrowers missing out on significant savings by not switching, ACCC
• Limited Recourse Borrowing Arrangement (LRBA) Provisions, Australian Taxation Office
• Changes to LRBAs for property from 10 August, Australian Taxation Office
• Changes to limited recourse borrowing arrangements, Australian Taxation Office
This article is general information only and does not take into account your objectives, financial situation or needs. SMSF borrowing involves specific legal and tax rules, so seek professional advice. Connective Credit Services Pty Ltd, Australian Credit Licence Number 389328.
