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• What is home loan refinancing?
• Understand how to refinance your home loan – and why it’s worth considering
• What are the benefits and potential risks of refinancing my home loan?
• When would I refinance my home loan?
• How have interest rates affected home loan refinancing in Australia?
• Is it worth refinancing my home loan for 1%?
• What does the typical refinancing process look like?
• Can I refinance to buy an investment property?
• Make a refinance home loan comparison

Long story short

Refinancing can save you thousands over the life of your loan

Swapping to a lower interest rate or better-suited loan can cut years off your mortgage and save you big on interest.

Refinancing can offer flexibility for changing needs

Whether locking in certainty with a fixed rate or enjoying flexibility with variable, refinancing gives you the power to switch.

Your refinancing decision might be affected by potential costs

Up-front fees, break costs and lenders mortgage insurance can add up. Weigh these carefully to decide whether refinancing is worth doing.

Simplify your repayments by consolidating your debts

With refinancing, you can bundle debts like credit cards and personal loans into your mortgage to streamline your finances.

What is home loan refinancing?

Refinancing a home loan means switching to a new one – either with your current lender or with a new one. Homeowners usually do this to get a lower interest rate, access their equity for a big spend like renovations or get a new loan with better features.

Over time, as the market changes or your financial situation shifts, the home loan that once seemed perfect might not be doing you any favours anymore. If that happens, you might decide to swap out your current home loan for a new one that better suits your needs or saves you money.

You can refinance in two ways:

• External refinancing: You switch your mortgage to a different lender – often triggered by a desire for a better rate, lower fees or more flexible features.
• Internal refinancing: You stick with your current lender, but switch loan products. This can make sense when your lender suddenly has a deal you want, or you’ve outgrown your original loan’s features.

Understand how to refinance your home loan – and why it’s worth considering

Refinancing your home loan involves switching to a new loan, either with your current lender or a new one. It’s worth considering whether you want to lower your interest rate, access your equity for significant expenses, switch from fixed to variable interest rates or unlock features like redraw facilities or offset accounts.

Watch this quick explainer to understand how it works, its benefits and potential drawbacks.

What are the benefits and potential risks of refinancing my home loan?

The benefits of refinancing your home loan include securing a lower interest rate and accessing equity for major expenses like renovations, while the risks include needing to pay setup or break fees and facing higher overall costs in the long run.

You might also benefit from refinancing by being able to consolidate debt, shortening your loan term or gaining access to additional loan features. However, it could also mean having to pay lenders mortgage insurance (LMI) again in some instances or experiencing a temporary negative impact on your credit score.

Helpful tip

While refinancing your home loan might be more effort than switching your energy provider, the potential financial reward is quite often much greater. Reducing your interest rate by even a few percentage points may not seem like much, however over the lifetime of a loan, you could end up saving thousands – or even tens of thousands – of dollars in interest. And you could not only reduce the amount interest payable but also pay off your loan much faster and be mortgage free much earlier in life.

Canna Campbell

Financial Planner & Founder of SugarMamma TV

When would I refinance my home loan?

Refinancing your home loan is a good idea when the savings you get over time far outweigh the up-front costs. Many home loan experts recommend that you review your home loan every year and consider refinancing every few years to ensure your rate remains competitive.

There are a few circumstances that might prompt you to look into refinancing your mortgage:

• You might consider refinancing when your current home no longer suits your needs, or when there are more competitive interest rates out there. Things can change quickly, so it makes sense to regularly assess and compare your home loan.
• If you want to get some savings from a lower interest rate and take advantage of cash incentives offered by banks to refinancers, then switching home loans could be a smart move.
• To avoid hairy financial situations, you’ll want to ensure that your home loan continues to align with your lifestyle and budget. For example, if your income has increased substantially, you may want to put in extra repayments (either more frequently or with a higher monthly amount) so you can pay off your loan faster. The opposite applies if you unfortunately experience a loss in income.
• Some people might refinance to draw funds from their existing equity to cover large expenses, such as a new car, a holiday, renovations, or an investment property. Refinancing can also be a way to get money in a financial emergency.

How have interest rates affected home loan refinancing in Australia?

Interest rate changes tend to spark big waves in refinancing across Australia. When the Reserve Bank of Australia (RBA) announces higher rates, many homeowners look to refinance so they can lock in more manageable repayments. And when there’s a cut in the RBA cash rate, borrowers jump at the chance to renegotiate lower variable rates or switch to cheaper fixed-rate loans.

Just have a look at the graph.

As many of us already know, Australia’s cash rate reached near-historic lows during the pandemic. Over that time, many borrowers had taken out loans at a low fixed rate that hovered around 2% to 2.5%. Since then, an external refinancing frenzy that started in late 2020 continued from the start of 2021 to June 2023.

From May 2022 to November 2023, the RBA hiked rates to fight inflation. And with more than half the pandemic-low fixed-rate home loans expiring in 2023 (especially in the second half of the year), borrowers scrambled to lock in better deals or break out of expiring fixed loans. This is reflected in the 2023 peak in external refinancing in both graphs across owner-occupiers and investors.

After a dip in external refinancing around the end of 2023, the refinancing wave surges on. The number and value of both external and internal refinancing keep growing, as property owners look for better rates and explore their options.

External refinancing appeared to plateau between March 2025 and March 2026. However, internal refinancing continues to grow among owner-occupiers.

Is it worth refinancing my home loan for 1%?

Yes, a 1% rate reduction is generally well worth refinancing for. On a $500,000, 25-year loan, dropping your rate by just 1% can save around $90,000 in interest over the life of the loan. It can also cut your monthly repayments by $300!¹Indicative numbers from iSelect refinancing calculator, June 2026 Even after paying fees (which can set you back a few thousand dollars), the net gain could be significant.

Have a look at the table to see how much difference a drop by 1% can make in terms of:

• reduction in principal and interest repayments
• reduction in total interest over the life of the loan
• reduction in time paying off for loan.

Note: These figures reflect indicative interest and repayment amounts for a 25-year basic variable, no-offset, principal-and-interest loan with monthly repayments, based on the iSelect mortgage calculator. Data retrieved 18 June 2026.

If you’d like to learn more about how much a reduced rate can impact your mortgage (or explore how much you can save through time by refinancing), feel free to give our refinancing calculator a whirl. All you need to do is to add in the loan type, the balance of your loan, what remains in your loan term and the current interest rate.

What does the typical refinancing process look like?

First you determine your refinancing goals, then compare options to find lenders that can match your goals, put together all necessary paperwork and let your existing lender know about your intention to refinance. The entire refinancing process can take anywhere from 2 days to a month – depending on whether you’ve provided all necessary paperwork, how long the lender takes to review the application, how long the appraisal and underwriting take and how seamless the loan closing is.

(You can start by exploring your options on comparison sites like ours!)

Refinancing isn’t as painful as it sounds, but it’s worth knowing how it all works. Here’s what the refinancing process typically looks like.

Go back to the drawing board

Before you jump into refinancing, it’s a good idea to stop and think about what you’re after.

Chasing a lower interest rate? Looking to add features that might save you on interest or ditch ones you don’t use anymore? Thinking about swapping lenders? Have you explored the potential refinancing costs? It’s worth making sure refinancing lines up with your goals.

Compare your options

If you want to get a good deal, you might want to shop around a bit.

Comparing can make it easier for you to consider different home loans online. You can explore different lenders, so there are plenty of home loan options you could consider.

Get ready to submit your application

Once you’ve picked a new home loan that suits you, you’ll need to start the application process.

It’s pretty similar to the process of applying for your current home loan. Sometimes, your property might need to be re-valued by your new lender. (Your mortgage broker will let you know if this is required.)

Let your current lender know

If you’re switching lenders, you’ll need to let your current one know.

Your new lender and your broker can tie up your existing loan for you. Once you get credit approval and your current lender knows the settlement date, they’ll give you a final payout figure.

Pop the champagne!

Or however you prefer to celebrate your new home loan. You should receive all the info for your new loan and make the repayments to your new lender.

Can I refinance to buy an investment property?

Yes, you can. Refinancing your current home so you can buy an investment property is a common way to access the equity you’ve built and fund your new deposit.

Normally, when buying a home, you’d be asked to put down a deposit. If that deposit is less than 20%, you may also have to pay lenders mortgage insurance. But by refinancing your existing home, you may be able to access funds from your equity to cover the deposit for a new property. And since you have more funds for your deposit, you may have a sufficient amount to avoid paying lenders mortgage insurance altogether.

You can also switch between an owner-occupied home loan and an investment home loan when refinancing. Interest rates associated with owner-occupied loans are usually lower, but investment property home loans can come with tax benefits.

Make a refinance home loan comparison

No matter the reason you’re refinancing your home loan, comparing your options is an important step. We can help! At iSelect, we’ve partnered with the experts at Aussie, to help you compare home loans from a range of providers. Compare now.