Staying with your current lender could be costing you thousands. Find out if you could save in the table below.
loans.com.au Essentials - Variable (Owner Occupier, P&I;)
variable rate
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loans.com.au Essentials - Variable (Owner Occupier, P&I)
A low-interest rate loan suited for refinancing with no application or ongoing fees.
Compare refinance home loans today
Rates last updated January 20th, 2017.
Jodie
iConnect Financial mortgage brokers work with a range of well known lenders to find you the right home loan.
Fill in your details in the form to the left and a local mortgage broker from iConnect Financial will contact you at a time which suits.You’ll be able to discuss your goals and what home loan you’re looking for, and your iConnect Financial broker will help you select the right loan. They’ll even help you with the paperwork and application process.
What is refinancing?
Refinancing is the act of switching home loans. This can be by moving your loan to a new lender, or just by changing the type of home loan you have with your existing lender.
Usually, refinancing is done to get a lower rate or a loan suitable for pursuits such as renovations.
More often it's done by switching to a new lender that may offer an interest rate or features that better suit your situation.
Why should I consider refinancing my home loan?
As we mentioned above, refinancing is usually done to reduce costs or to better suit your life.
In reality there are a range of reasons why you might want to say goodbye to your existing lender and look for a new one.
Let's have a look at the various reasons below:
1. For a better interest rate
It's always a good idea to approach your existing lender first to ask for a better interest rate. Make sure you do your research beforehand and show them the existing deals in the market and ask if they can match it. Staying with your existing lender could mean that you save on discharge or exit fees plus application fees of your new loan, not to mention the amount of paperwork you've saved. If your lender is unwilling to help, then it might time to move on.
2. To access and use equity
If you've built a significant amount of equity in your home and you'd like to use as a line of credit, you could opt for an equity line home loan. You can use this equity to purchase other properties or assets, such as funding a renovation for your home or purchasing a new car. One of the advantages to this is that you can purchase an item with the same interest rate as your home loan, rather than committing to an interest rate offered on a personal loan or credit card. However, one of the risks of accessing this equity is that it might take a bit longer to pay off your mortgage. Your interest is calculated on the remaining balance of the account, so the longer you hold your income, the less interest you can pay.
3. To get new features
Again, it's a great idea to approach your lender first if you want more features. Features like additional repayments, portability and offset accounts can help you save on interest repayments. If you existing home loan doesn't have these features and you feel as though you have the financial capacity to make additional repayments and leave money in your offset account, then it might be the time to switch. Also,
Also, a redraw facility is usually available if you opt for additional repayments so you can access the extra money in an emergency. For example, for those who have built equity in their home, you may be looking for a line of credit and for investors, you may be looking for interest-only repayments.
4. To pay less in fees
Fees should always feature in a home loan comparison. Compare the application or establishment fees, ongoing fees, valuation fees, monthly or annual fees, and any other fees for using features such redraw facilities or 100% offset accounts. Just because a home loan has an annual fee or application fee it doesn’t mean it should be avoided. Take the time to look at it in depth and find out whether the fees are worth it for the benefits.
5. To get a loan that better suits your life
Different home loans suit different life stages, look below to see what kind of loans or characteristics may suit you.
First home buyers
- Low rate and low fees
- Ability to make extra repayments
- Introductory rate or basic home loans may suit these borrowers
Young professional or family
- Portability
- Redraw facility
- Standard variable or fixed rate loans may suit these borrowers
Middle aged professional
- Redraw and offset facilities, packages with linked products
- Convenient and flexible product
- Package home loan or line of credit loan may suit these borrowers
Preparing for retirement
- Low rates and fees
- Ability to access home equity
- Line of credit home loan or basic home loan
55 and over/retired
- Redraw facilities and option to access equity
- Line of credit home loans or reverse mortgages may suit these borrowers
ALSO READ: Learn about home loan fees from application to exit.
6. To take advantage of a cashback
Many home loans will offer refinancing cash incentives or sign-up bonuses all year around, with the most offers happening during ‘mortgage season’ which is usually around Spring. These are usually around the $1,000 mark, but can be as high as $2,000. These can be a great way to minimise the costs of refinancing, but be sure that the loan you’re applying for still has a competitive rate, fees and features so that once the cash back is gone you’re not left with an uncompetitive loan.
7. To consolidate debts
Juggling a few debts can be hard - this is where a debt consolidation loan could help. It can roll all your existing debts into manageable loan. If done correctly, you can save on fees and reduce the amount of interest payable by paying it all off with one repayment at a competitive interest rate.
It's important to work closely with your lender during this period to ensure that you actually save money in the process. There's the risk of increasing the loan terms on some of your short term debts (such as a credit card) and you may end up paying more.
- Can I refinance my home loan and consolidate my credit card debt? It's definitely possible to refinance and consolidate your debit card debit. Your lender will assess your current income and entire loan amount. You'll also need to take into account lenders mortgage insurance and refinancing costs - be sure that the amount you'd like to refinance is less than 80% LVR.
8. To get better customer service
Not all banks are equal, and this is the most difficult consideration to measure. You need to be happy with their lending and reputation. Too many people refinance on a yearly basis and this could end up costing you money, rather than saving. You shouldn't be too refinancing too often, as it could become a distraction to your bigger goals, which is to own your own home sooner. Make sure that you ask the following questions and that the lender meets up to your expectations:
- How much guidance and support are you going to provide?
- Does the support align with my needs?
- Is it you that I'll speaking to the whole time?
Having one person dedicated to your home loan application and needs is a lot easier and convenient than speaking to multiple departments. What sort of guidance will you be providing through this process? The amount of support they're willing to offer generally reflects the standard of their customer service.
The refinancing process
Refinancing involves first speaking to your lender to see if they can give you a discount or offer a better loan. Presuming this doesn't solve things, you'll then compare other loans and apply for one you're interested in.
The diagram below explains the process visually.
What are the advantages and disadvantages of refinancing?
- You could potentially get a lower rate
- You could potentially save on fees
- Your loan might suit you better in terms of interest rate type and features
- Your new lender might offer better service
- You'll have to pay a discharge fee to get out of your old loan
- You'll usually have to pay upfront fees for your new loan
- You might have to pay expensive break fees for your old loan when you leave if it's a fixed rate
When does it make sense to refinance?
Refinancing should be done when you can get a home loan which costs less (either in fees and rates) and still suits your needs, or suits them better than your previous loan.
Other reasons for refinancing include:
- To renovate your home
- To consolidate debts
- To buy a new home
You can read in depth about good reasons to consider refinancing in our guide.
Former Aussie Home Loans General Manager of Marketing Stuart Tucker neatly sums up when you should consider refinancing:
When does it not make sense to refinance?
- You have a fixed rate home loan with a very high exit cost and the cost of fees could outweigh the benefits of refinancing until the fixed rate period is over
- You think you’ll probably sell your property in the near future and you won't keep the loan long enough to make any decent savings
- Your loan amount is small; in this case the savings you’ll get by refinancing might not be worth the interest you’ll pay
- You've been with a lender for quite some time, enjoy the service you receive and have other products with them (you might be better off asking your lender for a discount)
- Your property value has fallen or your LVR is still over 80%, this could see you pay lender’s mortgage insurance again
- You need to refinance to a longer term, but this could result in more interest paid
Read our guide to better understand if there is any value in refinancing your home loan.
How much will it cost me to refinance?
Exit costs of old loan
- Discharge fees. $200 - $400. These are usually charged by your old lender to give you back your title deeds.
- Exit fees. $varies. If your loan was entered into before 1 July 2011 you may still have to pay mortgage exit fees, even on a variable rate home loan. These can be quite expensive, but you might be able to get a discount from your lender. If you have a fixed rate home loan, you’ll still have to pay exit fees as your lender could be losing out by letting you leave your loan.
Upfront costs of new loan
- Application/establishment fees. $200 - $600. These fees cover the initial costs of setting up your home loan.
- Valuation fees. $100 - $300. Your new lender will want to have your property valued to decide how much to lend you. This fee covers the cost of an independent valuer.
- Settlement fees. $100 - $300. This fee covers the cost of your lender arranging your funds.
- Legal fees. $75 - $150. These fees cover the cost of your lender's solicitors which arises out of your application.
- Stamp duty. $varies. You may have to pay stamp duty when refinancing, which is charged by the state. We have a stamp duty calculator you can use to get an estimate of how much you might pay.
- Lender’s Mortgage Insurance (LMI). $varies. If you’re borrowing over 80% of the property value you could have to pay LMI premiums. This can cost well into the thousands, and depends on how large your loan is and how much equity you have.
- Ongoing costs. $varies. A home loan might keep charging you fees even once you’ve settled. Things like redraw fees, monthly fees or annual fees should be taken into account.
Want to compare the expenses of two loans? Use our loan switching calculator
Back to topAre there any tax implications when refinancing?
There might be tax implications for you depending on your situation and whether the property is an investment or not. It’s always wise to speak to an accountant first.
Back to topShould I review my home and contents insurance too?
If your looking to review your current home loan for a better rate, it could also be a good time to review your current insurance polices to ensure you have an adequate level of cover in place at a competitive price. Many lenders will require that you have at least home insurance to protect the property. Most insurance consultants will recommend you review your life insurance policy annually to ensure it still measures up to your financial obligations. It could be worth making a free enquiry with a consultant to find out what else is available and if your better off refinancing. Protect your loved ones and loved possessions with home insurance.
Back to topWhat documents do I need to supply?
Generally you’ll need to provide proof of your salary and other income, government payments, home loan statements and a copy of your council rates notice. Statements for any liabilities and either your drivers licence or passport. Once your information has been reviewed, your lender can normally give you a response fairly quickly. The verification, valuation and assessments, approval and settlement can take up to a month or more to complete depending on your financial situation.
Back to top
If I have two St George loans with a mate of mine…(both our names on both…he pays one and I pay the other) what is the best way of getting out of having two loans and having only one with my name and one with his name on it?
Phil.
Hi Phil,
Thanks for your question.
It is possible to refinance a joint personal loan to an individual loan and get a better rate through any of the refinancing loans on this page. Please note that you should meet certain eligibility criteria to get approved. Please click the name of the loan product on our page so you’ll see the details how to qualify. The ‘go to site’ button is for submitting your application.
Cheers,
Anndy
How to refinance the exsiting mortgage for low interesr rate
Hi Senita,
Thanks for your question.
If you are looking to refinance your existing mortgage, the step-by-step refinancing process is explained in the above infographic.
Cheers,
Anndy
I have a rented unit in Sydney that I would like to refinance to buy land in NZ where I now live. I have contacted a broker who came back with 75% LVR (thats OK), but with a whopping 7.35% interest.
What other options are open to me?
Hi Richard,
thanks for the question.
You’ve come through to finder.com.au, a comparison service. Unfortunately by law we’re unable to suggest specific home loan rates and fees which you could apply for. It might be a good idea to contact a number of lenders that you’re interested in or alternatively speak to another broker to get another recommendation.
Cheers,
Marc.
Do you know if any of the lenders will re-finance pensioners? Both aged 60, and still have 15 years left on current mortgage
Hi Ros,
thanks for the question.
While I can’t by law suggest specific lenders to try to refinance to, a good mortgage broker will be able to give you a personalised suggestion of which lenders to speak to.
I hope this helps,
Marc.
Hi Ros,
Thanks for reaching out.
It may be difficult to qualify for a refinance if you are pensioners as most lenders will review you as high-risk borrowers. However, your best course of action would be to speak to a licensed mortgage broker to discuss your refinance options. A broker can help you understand your borrowing capacity and they can draw upon a panel of lenders, including specialist or non-bank lenders, that may have more lenient eligibility criteria.
Ultimately, a broker will determine your propensity to repay the refinanced loan by taking into account your income sources, assets, credit history and any existing debts that you have. This type of application will be treated on a case-by-case basis.
We have a page about refinancing after retirement which you might find useful.
All the best,
Belinda
I have A mortgage in New Zealand and I wondered if I could refinance that mortgage in Australia. I live and work in Australia now and it costs money to transfer to and from New Zealand. Or is there a way I could get part of a loan, say 100000 to pay part of that mortgage off and pay it in Australia? Thanks
Hi Terry,
Thanks for reaching out.
Most Australian lenders prefer that the security for the home loan is based in Australia, so it may be difficult for you to refinance the mortgage in this case. However, your best course of action would be to speak to a licensed mortgage broker as they’ll be able to help you understand your refinancing and borrowing options.
To minimise the cost of transferring funds to and from New Zealand, you can compare a range of global money transfer providers to find one with competitive terms.
All the best,
Belinda
Hello,
My apologies up front for the length and amount of questions involved but I’m at the desperate stage. I am on the dsp, my husband is my career and on the carer’s pension and allowance. This is our only income. We would like to borrow $25000 for debt consolidation, home renovations and the purchase of a small second hand car. We owe approximately $155000 on our home loan and have had our home appraised by three separate agents as it is at $35000 – $36000. Our present home loan is with BankWest at 4.29% variable. The bank has given us this year at an interest only rate, but is unwilling to allow us to refinance because we are on pensions. Is there any financial institution that will either assist us in refinancing or give us a personal loan for $25000? We are wanting to do the renovations preparatory to hopefully putting our house on the market by November/December this year? We have already been turned down by Society One and NAB because our income is only from Centrelink pensions. I am at a loss to know where to turn now and would be very grateful for any assistance that could be provided? One other item to consider is that our VEDA credit scores are in the 700′s and 800′s respectively.
Thank you, very much
Shawn
Hi Shawn,
Thanks for your enquiry.
Unfortunately it may be difficult for you to refinance your home loan if you don’t have a secondary source of income to supplement your DSP.
You might be interested to read our page about refinancing while unemployed which provides some useful tips about how you can improve your chance of being approved for a refinance application. You may want to consider requesting a copy of your credit file, clearing your existing debt (e.g. other personal loans or credit cards) and considering niche or non-bank lenders that may have more lenient eligibility criteria.
We also have an article about how to refinance your home loan to consolidate debt and what to do if your application is rejected.
On this page, you can learn more about home loans for Centrelink recipients and enquire with a mortgage broker to discuss your options. Be careful about over-applying for different home loans as this can negatively impact your credit file.
You can compare some personal loans here.
I wish you all the best.
Thanks,
Belinda
hi i have a investment property with a interest only loan but want to move into that property change the the loan as owner/occupy variable to pay the house off quicker i owe $247000 and is value at $310000 also would like to borrow $10000 to do go on a holiday what should i do
Hi Brad,
thanks for the question.
I would recommend contacting your lender and tell them about your plans to see what options they can offer you. Alternatively, you can compare home loans from new lenders and contact them to refinance.
I hope this helps,
Marc.
Can a bridging loan be refinanced if a person has no job?
Hi Moggy,
thanks for the question.
Unfortunately, most lenders will want to see borrowers with a steady income source in order to approve a refinance or any other type of loan.
I hope this helps,
Marc.
We have quite a few investment properties though all mortgaged. We are self employed and have made payments without any problem as rent received is enough to pay expenses. However, recently we tried to increase our loan but came across brick wall after brick wall with the big Banks. Apparently they do not favour anyone over 70 years and 60 years although we have no problems with our payments. This is age discrimination and certainly not caring for existing customers. Are there any lenders out there who will give us a loan?
Hi Choo,
thanks for the question – it can be frustrating to run across these kinds of obstacles when looking for a home loan.
There are lenders which will consider applications from borrowers of your age, although unfortunately the banks keep this kind of criteria fairly under wraps from the average consumer. For this reason I recommend contacting a mortgage broker, who will have more experience dealing with lenders and will know which one will be appropriate for your age and other circumstances.
You can find a mortgage broker by looking at our comparison table. Note that most mortgage brokers are free to you, they earn a commission from the lender you choose to go with.
I hope this helps,
Marc.
My partner owns land with a mortgage of $400,000.
WE want to demo the home and build on that land!
I have $200,000 to use towards our build but will need another $250,000 to complete the home .
What are our options? Refinance in both names ? Or mortgage the build costs in my name only?
Can we avoid paying stamp duty again?
Hi Sullivan,
Thanks for your enquiry.
finder.com.au is an online comparison and general information provider so we can’t offer advice about your refinancing options.
You can, however, read more about construction loans on this page and you can compare different fixed rate construction home loans here.
Additionally, you can read about the process of changing the property ownership and adding your name to the title deeds on this page which discusses stamp duty implications. In some cases, you may not have to pay stamp duty when adding a partner’s name to the property title, but you’ll need to check this with your state office of revenue.
Thanks,
Belinda