Loyalty to your lender rarely pays. If you haven't reviewed your home loan in the past 12-18 months, here are six signs you should be looking at refinancing.
- If you haven't reviewed your loan in 12-18 months, you're statistically likely paying a loyalty tax.
- A rate drop of even 0.25-0.50% can save thousands a year on a typical Sydney mortgage.
- The end of a fixed-rate period is the single best trigger to refinance before rolling to a high revert rate.
- Refinancing can also unlock equity for renovations or investment — not just a cheaper rate.
Australian homeowners collectively leave billions of dollars on the table every year by not refinancing when they should. The Reserve Bank of Australia has noted repeatedly that existing customers often pay materially more than new customers with the same lender.
If you haven't reviewed your home loan in the last 12-18 months, now is a good time. Here are six signs it might be time to switch.
Sign 1: Your Rate Hasn't Moved Despite Market Changes
If the cash rate has changed and your lender hasn't passed it on in full, or if you're on a rate that was "competitive" two years ago but now looks expensive, that's a clear signal. Lenders routinely reserve their best rates for new customers.
What to do: Ask your broker to run a quick rate comparison. If there's a meaningful gap, the cost of refinancing is usually recovered within 12-24 months in interest savings.
Sign 2: Your LVR Has Dropped Below 80%
If your property has increased in value and you've been repaying your loan, your loan-to-value ratio may have dropped below 80%. You may be able to refinance without LMI and potentially access lower rates. Check your current LVR: divide your remaining loan balance by your property's current estimated value.
Sign 3: Your Fixed Rate Period Is Ending
When a fixed rate period ends, your loan typically rolls onto the lender's Standard Variable Rate — which is rarely the most competitive option. The window to act is in the 3 months before your fixed rate ends.
Sign 4: You Want to Access Equity
If your property has grown in value, refinancing allows you to access that equity for a renovation, investment property deposit, or other purpose — at home loan interest rates rather than personal loan rates. Our cash-out refinancing service explains how this works in detail.
Sign 5: Your Life Circumstances Have Changed
Marriage, divorce, having children, a career change — major life changes often mean your loan structure no longer reflects your situation. For complex situations involving debt consolidation, refinancing can roll multiple high-rate debts into a single lower-rate home loan.
Sign 6: You're Paying Too Much in Fees
Some older home loans carry annual fees or monthly account-keeping fees that erode any rate savings. Newer products often have zero ongoing fees.
The Cost of Refinancing
Refinancing involves discharge fees ($150-$400), potential application fees ($0-$600, often waived), and break costs if leaving a fixed rate early. A good broker calculates the break-even point — how long it takes for savings to outweigh switching costs. For most refinances, this is 12-24 months. Moneysmart's mortgage switching guide covers the key steps clearly.
How to Refinance
The process: contact your refinance broker for a health check, identify the best option across lenders, submit an application, property valuation, approval, then settlement. Your broker manages most of this — most refinances settle within 4-6 weeks.
Use our repayment calculator to model what a lower rate looks like. Then contact Sam for a free refinance health check across 40+ lenders.
Frequently Asked Questions
Will refinancing affect my credit score?
A refinance application involves a credit enquiry, which has a minor short-term impact on your credit score. The impact is typically outweighed by the financial benefit of a better loan.
Can I refinance if I'm in negative equity?
Refinancing in negative equity is difficult, as most lenders require your loan to be below the property value. There are limited options — we recommend discussing your specific situation.
