Refinancing means replacing your current home loan with a new one — either with your existing lender or a different one. It's a decision worth revisiting periodically, but it isn't automatically the right move every time. Here's what typically drives the decision, and what to weigh up before switching.
Common reasons homeowners refinance
- Seeking a more competitive rate — even a modest rate difference can add up over the life of a loan.
- Accessing equity — for renovations, investment, or other financial goals, subject to lender assessment.
- Consolidating debt — combining multiple debts into a single home loan repayment, where appropriate.
- Changing loan features — such as moving to a loan with an offset account or more flexible repayment options.
- Switching from fixed to variable (or vice versa) — as personal circumstances or preferences change.
Costs to factor in
Refinancing isn't free. Costs can include discharge fees from your current lender, application or valuation fees with the new lender, and potentially break costs if you're exiting a fixed rate period early. Government fees for registering a new mortgage may also apply. These costs need to be weighed against the expected benefit of switching.
Questions worth asking before you refinance
- What are the total costs of switching, including any exit and establishment fees?
- How long do I plan to stay in this property or keep this loan?
- Am I comparing the full loan features, not just the headline rate?
- Has my financial situation changed since my original loan was approved?
Getting a clearer picture
Because refinancing costs and benefits depend heavily on your existing loan terms and the new loan on offer, comparing options side-by-side is usually more useful than looking at any single rate in isolation. A broker can help lay out what refinancing would actually look like for your specific loan.
VIP Finance operates as a Credit Representative (Number 565614) and holds ABN 59 323 956 021.
The information on this page is general in nature and doesn’t take into account your personal financial situation or objectives. It isn’t personal financial advice, and you should consider whether it’s appropriate for your circumstances before acting on it. Loan approval is always subject to the lender’s own credit assessment criteria.
