Should you actually refinance your home loan?

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Written by ShaheeraPrincipal Mortgage & Finance Broker. 20+ years in lending, including senior lending roles at ANZ. Credit Representative 000499740 under Australian Credit Licence 389328.

Last updated 28 July 2026

Refinancing just means replacing your current home loan with a new one, usually for a lower rate, better features, or to free up some equity. The part that trips people up is working out whether the switch actually leaves you better off, because the savings only count once you subtract what it costs to move.

This guide walks through the whole thing in plain English: the signs it's time to review, the numbers that matter, the costs people forget, and the situations where refinancing is the wrong move. We will not push you to switch if it does not save you money.

The "loyalty tax" nobody warns you about

Here is how it works inside the industry: lenders keep their lowest rates for new customers. The person who's been quietly paying on time for four years often sits on a higher rate than the one being advertised to win business this week. That is not a mistake. They are counting on you not checking. That gap between what you're paying and what you could be paying is what people call the loyalty tax, and it's the single most common reason a review is worth doing.

You don't get a letter when a better rate appears. Your repayments just keep leaving your account, and the difference adds up.

Six signs it's worth reviewing your loan

You don't need all of these. Any one of them is a reasonable reason to have your loan looked at:

• You haven't reviewed your rate in two years or more.Rates and lender offers move constantly. A loan set up a few years ago is rarely still the sharpest one available.
• Your fixed rate is about to end.When a fixed term rolls off, most loans revert to a higher variable rate automatically. That is a good time to check the market before it happens.
• Your home has gone up in value.More equity can mean a lower loan-to-value ratio, which can open up better pricing, or the option to consolidate other debts into your mortgage.
• Your income or circumstances have changed.A pay rise, a new job, or paying down other debts can all make you eligible for loans you weren't before.
• You want features your current loan doesn't have.An offset account, a redraw facility, or the ability to make extra repayments without penalty can be worth more than a headline rate.
• You have several debts.Sometimes rolling a car loan or credit card into your mortgage lowers your monthly outgoings, though it can cost more over the full term, so it needs doing carefully.

What refinancing could actually save you

The honest answer is that it depends on your balance, your rate, your loan term and the fees involved. But the numbers are worth seeing.

The quickest way to get a rough figure is to run it through our repayment calculator, then have the fees checked against it so you're comparing like for like.

When refinancing is the wrong move

A good broker will talk you out of switching when the numbers do not work. Refinancing usually is not worth it when the fees to move cancel out the savings, when you're only a year or two from paying the loan off anyway, or when a fixed-rate break cost is larger than what you would save. It can also work against you if extending the loan term lowers your monthly repayment but adds years of interest.

How the process works, step by step

1. A quick chat and rate check. No documents, no credit enquiry. Just your current lender, rough balance, and what's prompted you to look.
2. A comparison across lenders. Your rate and features get compared with what is available now, with the switching costs included.
3. You see the real numbers. If there's a genuine saving, you'll see exactly what the new loan looks like, repayment, features and total cost. If there isn't, you'll be told straight.
4. The application, handled for you. If you decide to proceed, the paperwork, the valuation and the dealing with the lender are handled for you.
5. Settlement. The new loan pays out the old one, usually within four to six weeks, and your repayments switch across.

Why check with a broker, not just your own bank

Your bank can only ever show you its own rates. A broker compares 35+ lenders at once and handles the paperwork for you. And because Shaheera spent two decades approving loans from the lender's side of the desk, we know how to put an application together so the lender gets what they need. In most cases a review costs you nothing, brokers are paid by the lender you choose, not by you.