How to Refinance a Home Loan [2026 Complete Guide]

When refinancing your home loan makes sense

Refinancing means replacing your current loan with a new one, with a different lender or the same lender. Common reasons:

• A lower interest rate. If you haven’t reviewed your loan in a while, other lenders may offer a noticeably lower rate.
• Your fixed rate is ending. The rate you roll onto may be higher than what other lenders offer. Start comparing a few months before it ends, so you don’t roll onto the new rate by default.
• Better features. An offset account, redraw, or the option to split between fixed and variable.
• Accessing equity. For renovations, an investment deposit or other goals.
• Consolidating debts. Rolling car loans or credit cards into your home loan, which needs care (see below).

Refinancing may not suit you if you’re partway through a fixed term with high break costs, have less than 20% equity and would pay lenders mortgage insurance again, or your income has dropped, because you’ll be assessed again as a new borrower.

Start by asking your current lender for a better deal

Before you switch, tell your lender you’re planning to move to a cheaper loan elsewhere and ask them to reduce your rate. Moneysmart lists this as the first thing to try: it costs nothing and avoids the costs of switching. You have more bargaining power with at least 20% equity and a good credit score. Go in with a specific competing rate and its fees, so the conversation is about numbers rather than loyalty.

Compare any offer with what other lenders would give you. If your lender won’t move, or the gap is still wide, refinancing is worth a closer look. You can also move to a different loan with the same lender, which may involve a switching fee.

The costs of refinancing a home loan

Add up every cost of switching before you compare savings.

Two costs you usually won’t pay. Exit fees (early termination fees) are banned on home loans taken out from 1 July 2011, although break costs on fixed rates are still allowed. And NSW abolished mortgage duty from 1 July 2016, so refinancing a NSW home loan doesn’t attract stamp duty unless ownership of the property changes too.

How to work out if refinancing will save you money

Compare the monthly saving from the new rate with the total cost of switching, then work out how many months it takes to recover the cost. Keep the loan term the same so you’re comparing like with like, and include ongoing fees such as annual package fees, not just the rate.

Moneysmart’s mortgage switching calculator (opens in a new tab) runs the same comparison for your numbers, and our home loan repayments calculator shows how the rate and term change what you pay.

How to refinance a home loan, step by step

1. 1

   Review your current loan

   Note your balance, rate, remaining term, any fixed rate expiry, and features you use. Ask for your discharge fee and, if fixed, a break cost quote.

2. 2

   Set your goal

   Lower repayments, pay the loan off sooner, access equity or consolidate debt. It decides which loan suits.

3. 3

   Compare lenders and loans

   Look at the comparison rate, fees and features, not just the headline rate. A broker can compare many lenders at once and explain the trade-offs. Deciding between rate types? Read fixed or variable.

4. 4

   Apply with your documents

   The new lender assesses your income, expenses and debts, and runs a credit check.

5. 5

   Valuation and approval

   The lender values your property to confirm your equity, then issues formal approval and loan documents.

6. 6

   Discharge and settlement

   You sign a discharge authority for your current lender. Keep paying the old loan as normal until settlement day, when the new lender pays it out and your new loan begins.

7. 7

   Tidy up afterwards

   Set up repayments and any offset account, and move direct debits that were linked to the old loan.

What lenders check when you refinance

A new lender doesn’t take your current loan as proof you can afford it. They check your situation today, as if you were buying:

• Equity. The lender values your property. Borrowing up to 80% of the value generally avoids LMI; above that, expect to pay it.
• Serviceability. APRA expects banks to test whether you could still afford repayments at a rate at least 3 percentage points above the loan rate. If your income has fallen or your expenses have grown, you may qualify for less than you owe.
• Total debt. Since February 2026, APRA has limited banks to lending up to 20% of their new owner-occupier and investor loans at six times the borrower’s income or more. APRA says the limit isn’t restricting most lending yet, but it acts as a guardrail if high-debt lending grows.
• Repayment history and credit report. Missed repayments on your current loan or other debts make approval harder.

Documents you’ll need to refinance

• Photo ID, such as a driver licence or passport
• Recent payslips, or tax returns and financial statements if you’re self-employed
• Recent statements for your current home loan, showing a good repayment history
• Statements for savings, credit cards, personal loans and other debts
• Your council rates notice and building insurance details
• Details of your living expenses, which lenders compare with your bank statements

Self-employed? Lenders assess your income differently; see our self-employed home loans page.

Refinancing to consolidate debt or release equity

Rolling credit cards, car loans or personal loans into your home loan can cut your monthly repayments, because the home loan rate is lower. But Moneysmart warns it can cost more overall if the debt is spread over a longer term, and it turns unsecured debt into debt secured against your home.

If you consolidate, aim to pay the old debt off on roughly its original timetable, and close the cards you cleared. Releasing equity for a renovation or an investment works the same way: borrow for a clear purpose, with a plan to repay it. See our ways to reduce your home loan repayments for other options.

Refinancing with a mortgage broker

Mortgage brokers must act in your best interests when recommending a loan, and should show you more than one option and explain why each suits you. Lenders generally pay brokers a commission, so you usually don’t pay the broker directly, and brokers must tell you what commissions they may receive.

Moneysmart suggests asking any broker a few direct questions:

• Which lenders do you work with, and which can’t you access?
• How are you paid, and does it differ between lenders?
• Why is this loan in my best interests?
• What fees will I pay, and how do the loan’s fees and features affect its total cost?

At Keystone Home Loans, Phillip reviews your current loan, compares options across 50+ lenders and handles the paperwork through to settlement. Read more on our refinance your home loan page.

Frequently asked questions

How long does it take to refinance a home loan?

It depends on how quickly you supply documents, the new lender’s assessment and valuation times, and how fast your current lender processes the discharge. Having payslips, statements and your current loan details ready before you apply is the easiest way to avoid delays. We keep the process moving and tell you what’s outstanding at each stage.

Does refinancing hurt my credit score?

Applying for a new loan records a credit enquiry on your credit report, which lenders can see. A single, well-prepared application is rarely a problem, but several applications in a short time can look like financial stress. That’s one reason to compare lenders before applying, rather than applying to many and seeing who approves you.

Do I pay stamp duty when I refinance in NSW?

Not on the loan itself. NSW abolished mortgage duty from 1 July 2016, so a straightforward refinance of a NSW home loan doesn’t attract duty. Transfer duty can apply if the refinance also changes who owns the property, for example adding someone to the title, unless an exemption such as the one for spouses applies.

Can I refinance if I have less than 20% equity?

Yes, but the new lender will usually charge lenders mortgage insurance if you borrow more than 80% of the property’s value. That cost can wipe out the savings from a lower rate. It often pays to ask your current lender to match a better rate instead, and to ask whether any LMI from your current loan can be partly refunded.

Will I have to pay an exit fee to leave my lender?

Exit fees, also called early termination fees, are banned for home loans taken out from 1 July 2011. You may still pay a discharge fee to close the loan, and break costs if you leave a fixed rate early. Break costs can be large, so ask your lender for a written quote before you decide.

Sources

1. Moneysmart: Switching home loans (opens in a new tab)
2. Moneysmart: Debt consolidation and refinancing (opens in a new tab)
3. Moneysmart: Using a mortgage broker (opens in a new tab)
4. ASIC: RG 220 Early termination fees for residential loans (opens in a new tab)
5. APRA: Macroprudential policy settings (serviceability buffer) (opens in a new tab)
6. Revenue NSW: 2014 State Budget (abolition of mortgage duty from 1 July 2016) (opens in a new tab)