Should I Refinance My Mortgage?

Is it worth refinancing my home loan? It's a question I get asked a lot and there's certainly no end of media coverage about it. Refinancing your mortgage can be a great way to save money on your monthly payments and lower your principal balance, particularly if you are coming to the end of a fixed rate term. However, many people are put off exploring refinancing because they don’t fully understand what it means or they think it’s too complicated to find and negotiate a better deal. So I thought I’d help answer some of your most common questions about home loan refinance.

Understanding why, when and how to refinance a home loan is crucial so you can help make a reasoned decision about whether it's right for you. So let's take a look at some of the most frequently asked questions about home loan refinancing including:

• What is mortgage refinance?

• Why might you consider refinancing?

• When to refinance a home loan?

• How does refinancing a home loan work?

What Is Mortgage Refinance?

Home loan refinancing basically means changing your existing mortgage for a new one with a view to improving the terms of your loan. It involves taking out a new home loan to pay off your existing mortgage. The goal is to achieve better terms that may not have been available when you originally took out your mortgage.

Refinancing your mortgage can offer several benefits such as lowering your interest rate or reducing your monthly payments. Some homeowners also refinance to change loan features, such as reducing the loan term or to access home equity.

Why Do Current Home Owners Consider Refinancing?

There are heaps of reasons why people consider refinancing. If you've had your mortgage for a few years, the chances are your current loan may not have the flexibility or features that new borrowers have access to. It might also be because your needs have changed since you took out your original home loan.

We have a saying at CJG Finance: Loyalty is for friends, family and footy teams, not banks. Mortgage holders are becoming increasingly aware of something called 'the loyalty tax'. Many lenders reserve their best interest rates for new customers and, well, they can tend to take their existing clients for granted.⁣ But research by PEXA shows that refinancers generally gain an average 0.4 percentage point reduction in their home loan interest rate, saving $1524 annually on a $610,000 loan.

4 Reasons To Refinance A Home Loan

So why would you consider refinancing a home loan? Ultimately the decision will come down to your short or medium term goals and personal situation. Among the top reasons that we hear for people wanting to explore a new mortgage are:

Lower your interest rate

Finding a lower interest rate can save you money and might also help you to pay off your loan sooner. It means that your monthly repayments might be lower, leaving you with more disposable income. You may also then be able to reduce your monthly payment by increasing the amount of principal to be paid each month, allowing you to pay off your loan sooner and save on interest charges.

Accessing More Flexible Loan Terms

If you have had your loan for a while and your needs and circumstances have changed, you might want to refinance to take advantage of newer loan options. This could include flexible repayments, reducing your loan repayment term, making use of an offset account to reduce your interest charges or perhaps you want to consider a redraw facility if you plan on making some extra payments.

Consolidate Your Debts

Refinancing may enable you to consolidate other debts into one easy payment per month (such as credit cards, car or personal loans) making it easier for you to manage all of your finances.

Consolidating your debt may be the best way to lower your monthly payments and save money on interest charges. If you want to consolidate multiple debts into one payment, what you're really doing is borrowing against the equity in your house by taking out a new loan that pays off all of those other debts at once. This will allow you to pay just one payment instead of making multiple payments every month and usually at a much lower interest rate than what was being charged on those other accounts.

Access Equity In Your Home

If you have sufficient equity in the home, this option allows you to take out money from that equity and use it to achieve other finance goals, whether that be to renovate your home, travel, buy stocks and shares or even invest in a rental property.

When To Refinance Your Home Loan

Timing is crucial when deciding to refinance your home loan. One key driver is when interest rates are lower than when you secured your initial mortgage. Lower rates can reduce your monthly payments significantly.

In fact, the Reserve Bank of Australia (RBA) has cut interest rates three times so far this year (as at September 2025) and lowered the cash rate by 0.25% in August 2025, taking it to 3.6% - the lowest rate since April 2023.

Another key driver might be your personal goals or current situation. Consider refinancing if you're aiming to change the term of your loan. This could mean shortening your loan duration, paying off your mortgage sooner and reducing total interest paid. It's also a strategic step for those nearing retirement.

Property prices have been steadily increasing in Australia for the last few years, particularly in South East Queensland. So you might have more equity in your home than you realise. If the value of your property has gone up you could access better rates through having a lower loan to value ratio (LVR).

Getting the advice of a home loan broker can be invaluable in reviewing your personal circumstances and helping to decide if the benefits outweigh the risks.

How Does the Home Loan Refinance Process Work?

When it comes to how to refinance a home loan, the process can seem complex but the reality is you're basically paying off your current mortgage with a new loan. The process looks something like this:

• Assess current goals: Start by thinking about whether your current financial goals or personal circumstances are the same as when you took out the original home loan.

• Review current terms: Then take a look at your current mortgage rate and terms. Does it still fit your needs or are there features that you're missing that could now be beneficial?

• Explore the market: Next, shop around for lenders offering competitive rates and terms. Compare their offers carefully. Use online calculators to gauge potential savings and identify the most beneficial option.

• Start the application: When you’ve selected a lender, start your application. Prepare necessary documents such as income statements, tax returns and your credit report.

• Get a property valuation: A crucial part of the process involves an appraisal of your home, particularly if you're changing lenders or looking at cash out refinancing. The appraisal determines your property’s current market value, influencing the new loan terms.

• Review the new mortgage terms: When you receive approval, review the loan details thoroughly. Ensure all terms align with what you discussed. This step is essential to avoid surprises later on.

A mortgage broker takes care of most of these steps, making the process much more streamlined and straightforward.

Types of Home Loan Refinancing: Rate and Term vs. Cash-Out

It helps to understand a couple of the different types of refinance loans available. Typically, if you're looking to improve your mortgage deal through a lower interest rate or more features, you'll be looking for rate and term home loans.

Rate-and-term refinancing focuses on changing the interest rate, loan term or both. This type is ideal for lowering monthly payments or shortening the loan duration.

Alternatively, if you've built up considerable equity in your home, cash-out refinancing allows homeowners to tap into this. You refinance for more than you owe and take the difference as cash. This option is popular for consolidating debt or funding large expenses.

Choosing between these refinancing types depends on your financial goals and long-term objectives.

Costs and Fees to Watch Out For

When refinancing your home loan, it's essential to consider associated costs and fees. These can impact the overall savings you aim to achieve through refinancing.

Common refinancing costs include government charges, discharge fees and lender establishment fees These expenses can add up quickly, so calculate them carefully.

Here's a quick overview of typical fees:

• Government Charges: Range from $250 to $1,000

• Discharge Fees: Cost usually between $350 and $500

• Lender Establishment Fees: In the range of $0 to $550

Be mindful of hidden expenses like prepayment penalties on your current mortgage. Weigh all costs against potential savings to ensure refinancing remains beneficial in the long run. Proper evaluation will ensure you're refinancing for the right reasons.

How Frequently Can You Refinance A Home Loan?

When it comes to how often you can refinance your home loan, there's no legal limit on the number of times you can do it. However, frequent refinancing may not always be beneficial.

Each refinance involves costs and potential impacts on your credit score. Careful consideration is crucial before deciding to refinance again.

Here's what to keep in mind:

• Break-Even Point: Calculate when savings will outweigh costs.

• Credit Impact: Multiple refinances can affect your credit score.

• Market Conditions: Ensure new terms offer substantial benefits.

Always evaluate the long-term advantages and potential downsides before proceeding. This ensures you're making a financially sound decision.

Can You Refinance With the Same Bank or a New Lender?

Refinancing can be done with your current bank or a new lender. Both options have their advantages.

Sticking with your current bank might simplify the process. They already have your information, which can lead to faster approvals.

Switching to a new lender could yield better terms. Here's why:

• Competitive Rates: New lenders may offer lower rates to attract you.

• Better Terms: Different lenders might have more favorable conditions.

• Incentives: Offers like reduced fees may be available to new customers.

Evaluate both possibilities carefully to secure the best refinancing deal.

How Long Does It Take to Refinance a Home Loan?

The refinancing process usually takes about 4 - 6 weeks from application to settlement. However, this timeline may fluctuate.

Several factors influence the duration:

• Lender Efficiency: Some lenders process applications faster than others.

• Document Preparedness: Having all documents ready can speed up the process.

• Valuation Delays: Delays in home appraisals can prolong the timeline.

Being organised and responsive can help speed up the refinancing process.

When Does Refinancing Not Make Sense?

Obviously, there are circumstances where mortgage refinance isn’t going to deliver benefits. These include:

• If your loan to value ratio (LVR) is over 80%. If you’re borrowing more than 80% of your property’s value, this will trigger Lender’s Mortgage Insurance - even if you’ve previously paid it on your original mortgage.

• If you’re on a fixed rate loan, it’s worth talking to your mortgage broker as this generally means you’ll have higher break costs than if you’re on a variable rate.

• If you’re close to paying off your current home loan. If you have, for example, $100k left on your current mortgage, it may not be worth refinancing.

Refinancing offers many benefits but you should also be aware of some of the common mistakes that people make. Not all refinancing decisions result in savings.

Here are common mistakes to watch for:

• Ignoring Costs: Overlooking fees can erode savings.

• Frequent Refinancing: Can negatively impact your credit score.

• Prepayment Penalties: Check if existing loans penalise early payoff.

Research thoroughly before deciding. Being aware and proactive helps mitigate risks effectively.

FAQs About Home Loan Refinancing

What is refinancing a home loan?

Home loan refinancing means changing your existing mortgage for a new one with a view to improving the terms of your loan. It involves taking out a new home loan to pay off your existing mortgage.

When can you refinance a home loan?

There are no strict stipulations about when you can refinance your mortgage. However, you’re unlikely to see significant benefits of changing home loans within 12 months of obtaining the original loan. This is because of factors such as the costs associated with switching and the potential impact on your credit score.

Can I refinance my home loan with the same bank?

Yes - you can refinance with your existing lender by choosing a new loan type of a different loan product. This can sometimes speed up the process as you will be an existing customer. However, you will still likely have to complete the same basic application process.

How do you refinance a home loan?

The key steps to refinancing a home loan include: assessing your goals and reviewing your current terms; exploring the market to find products that suit your needs; submitting an application and getting a property valuation. You will then need to review the new terms offered to ensure they fit with your goals.

How often can you refinance your home loan?

There are no strict guidelines for how often you can refinance your home loan but it’s generally advised not to apply too frequently e.g. within 12 months of a previous application. Frequent refinancing can raise concerns with lenders and may impact your credit score. Refinancing every 2-3 years is fine.

Is It Time To Look At Home Loan Refinancing?

So, is refinancing right for you? Refinancing is a great way to save money and pay off your home faster. It can also be helpful if you want to consolidate debt or lower your monthly payments. If you’re thinking about refinancing your home loan, a mortgage broker can really help simplify the process.

With so many different lenders and products on the market and every lender using different criteria to set their rates, it can be really daunting to start the process. That’s one of the many benefits of working with a mortgage broker. We can do the research and shop around on your behalf and make sure you get access to deals that best suit your personal circumstances.

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Researching and comparing loans can be confusing and time-consuming.⁣ According to a recent MFAA survey, 70% of Aussies now use a broker to land a loan. That's because we can help you with:⁣

• Saving time (and money) - we’ll do the legwork for you and seek out competitive rates.⁣

• Targeted research - we’ll find the right type of loan for you. And go for lenders more likely to approve your application. ⁣

• Expert guidance - we'll help you organise your finances, source the documents you’ll need, and handle the application process.⁣

If you're interested in refinancing your home, let’s chat about your goals and the available options.

To find out more, contact us or call Colin at CJG Finance on: 0402 413 917 or email him: cgreen@cjgfinance.com.au

The information contained in this post is for general guidance only and does not constitute personal advice. It's important to do your own research as regulations, fees and charges change over time.