Refinancing is worth considering if you haven't reviewed your home loan in the past 12–24 months, your fixed rate is expiring, you've built equity, or your lender's rate is above the market average. On a typical Sydney loan, the savings can be significant — but costs and eligibility vary. A free home loan health check is the fastest way to find out. General information only — individual circumstances vary.
Why 2026 is a good time to review your home loan
A significant number of Australian borrowers are still on loans they set up 2–5 years ago — many paying rates well above what's available in today's market. The lending landscape has shifted, lender competition has increased, and many borrowers who have built equity or improved their financial position can access materially better products.
If you've never reviewed your loan, or haven't done so in the past two years, there's a reasonable probability you're paying more than you need to. The only way to know for certain is a comparison — which a mortgage broker can do at no cost to you.
Banks typically offer their best rates to new customers, not loyal existing ones. This is sometimes called the "loyalty tax" — the premium paid by borrowers who stay with one lender without regularly negotiating or comparing. A mortgage broker can identify whether you're paying a loyalty premium and what switching could save you. Individual outcomes vary.
When does refinancing make sense?
Refinancing is most likely to be worthwhile in the following situations — though individual circumstances vary significantly:
- Your fixed rate period is ending and you're rolling onto a higher revert rate
- You haven't reviewed your loan in 12–24 months
- You've built 20%+ equity and may qualify for better products
- Your income has increased or your financial position has improved
- You want to access equity for renovations, investment or other purposes
- Your current loan features don't match your needs (offset, redraw, flexibility)
- You want to consolidate debts (higher-rate personal loans or credit cards)
- You're moving from interest-only to principal and interest
How much could you save by refinancing?
The potential saving depends entirely on your loan balance, current rate versus available rate, and remaining loan term. The table below shows illustrative annual savings from a rate reduction on different loan balances. These are indicative only — actual savings vary by lender, your credit profile, property value, and many other factors.
| Loan Balance | Rate Reduction | Indicative Annual Saving | Over 5 Years |
|---|---|---|---|
| $500,000 | 0.25% | ~$1,250 | ~$6,250 |
| $500,000 | 0.50% | ~$2,500 | ~$12,500 |
| $750,000 | 0.25% | ~$1,875 | ~$9,375 |
| $750,000 | 0.50% | ~$3,750 | ~$18,750 |
| $1,000,000 | 0.25% | ~$2,500 | ~$12,500 |
| $1,000,000 | 0.50% | ~$5,000 | ~$25,000 |
Figures are purely illustrative, calculated on interest component only, and do not account for loan term changes, establishment costs, LMI, or compound effects. Actual savings may differ materially. Not financial advice.
What does refinancing cost?
Refinancing is not free — though costs are often modest for variable rate loans. Common costs to be aware of (vary by lender and state):
- Discharge fee — charged by your current lender to close the loan. Typically $150–$400
- Break cost (fixed rate only) — if you exit a fixed rate loan before the term ends, break costs can be substantial — potentially tens of thousands of dollars. Always check before proceeding
- New loan establishment/application fee — $0–$800, frequently waived by competitive lenders
- Government fees — mortgage registration changes. In NSW currently around $150–$250
- Lender's Mortgage Insurance (LMI) — generally not required if you have 20%+ equity, but applies if your LVR is above 80% at the new lender
- Legal/conveyancing — usually not required for a standard refinance
Total costs for a straightforward variable-to-variable refinance are often $500–$1,500, which can be recovered within weeks to months on a meaningful rate reduction. Your mortgage broker can calculate a break-even period for your specific situation.
If your loan is currently on a fixed rate, exiting before the end of the fixed period can trigger significant break costs — sometimes $5,000–$30,000+. These costs are calculated by the lender based on wholesale funding rates and are not always predictable. Always request a break cost calculation from your lender before committing to refinance a fixed loan.
Things that can prevent you from refinancing
Not everyone who wants to refinance will qualify. Common barriers include:
- Reduced income — if your income has dropped since your original loan, you may not meet a new lender's serviceability assessment
- Increased expenses — HECS debt, other liabilities or dependants can affect your borrowing capacity assessment
- Property value decline — if your property has declined in value, your LVR may be higher than at purchase
- Credit events — defaults, missed payments or other credit events on your file
- Serviceability buffers — lenders assess your ability to repay at a rate typically 3% above the loan rate
A mortgage broker can assess your situation across multiple lenders and identify options that may not be available through your current bank — including specialist lenders for complex situations.
Cashback offers — are they worth it?
Many lenders offer cashback incentives ($2,000–$4,000+) to attract refinancers. These can look attractive but should be assessed alongside the actual rate and product terms. A slightly higher rate on a large loan can cost more than the cashback value within a year or two. Always compare the total cost of the loan over your expected holding period, not just the upfront incentive. Individual outcomes vary.
The refinancing process — what to expect
- Free health check — your broker reviews your current loan, rate, LVR and objectives
- Market comparison — broker compares suitable products across the lender panel
- Application — broker submits your application to the chosen lender with documentation
- Valuation — lender orders a property valuation (usually at lender's cost)
- Approval — conditional approval issued if all criteria are met
- Discharge and settlement — old loan discharged, new loan settled. This is handled between lenders
- Ongoing support — broker reviews annually and alerts you to better options
The process typically takes 2–4 weeks from application. Your broker manages communication with both lenders and handles most of the paperwork.
Free Home Loan Health Check
Find out in 30 minutes whether you're paying too much — and what switching could save you. No obligation, $0 fee to you. Chris compares your current loan against the market across multiple lenders.
Frequently asked questions
Written and reviewed by Chris Brown, CEO & Founder of New Vision Financial Services. Authorised Credit Representative of Finsure Finance and Insurance Pty Ltd (ACL 384704). Published 16 August 2026. General information only — not financial, legal or taxation advice. Individual circumstances vary significantly. Seek independent advice before making financial decisions.