When to Refinance & How the Process Works

What Refinancing Means in Australia

Refinancing means replacing your current home loan with a new one, either with your existing lender or a different one. The new loan pays out your old loan, and you start making repayments under new terms, often at a different interest rate or with different features.

For someone who has recently moved to Australia, refinancing might seem like something only experienced property owners do. It's actually a standard part of managing a mortgage, and many people refinance within the first few years of owning property. The process involves submitting a new application, having your property valued, and going through credit checks again, much like when you first bought.

Why New Migrants Consider Refinancing

The most common reason is coming off a fixed rate period. Many new migrants lock in a fixed interest rate when they first buy, then find themselves moved to a higher variable rate once that period ends. At that point, refinancing to a lower rate can reduce monthly repayments by hundreds of dollars.

Another reason is accessing equity. If your property has increased in value or you have paid down the loan amount, you may be able to release equity to use as a deposit on an investment property or to consolidate other debts. This is particularly relevant if you arrived on a skilled visa, built income history, and are now looking to expand your property portfolio.

Some people also refinance to improve loan features. An offset account or redraw facility can make a real difference to how quickly you pay down your mortgage, and not all lenders offer these on entry-level products. If your financial position has improved since you first borrowed, refinancing can unlock access to better features and lower rates.

When the Numbers Make Sense

Refinancing makes financial sense when the interest you save outweighs the costs involved. Those costs typically include application fees, valuation fees, and sometimes discharge fees from your current lender. In most cases, if you are saving more than 0.5% on your interest rate and you plan to stay in the property for at least two years, refinancing will pay for itself.

Consider a buyer who purchased a unit with a fixed rate of 5.8% three years ago. That fixed rate period has now ended, and the lender has moved them to a variable rate of 6.4%. They still owe $480,000 on the loan. By refinancing to a variable rate of 5.7% with a different lender, they reduce their monthly repayments and save on interest over the remaining loan term. The total cost to refinance is around $1,200, but the monthly saving is close to $280, meaning the upfront cost is recovered in under five months.

How the Refinance Application Works

The refinance process follows the same steps as applying for a new home loan. You complete an application with your chosen lender, provide recent payslips, tax returns, and bank statements, and submit details about your property. The lender will order a property valuation to confirm the current value, then assess your borrowing capacity based on your income, expenses, and any other debts.

If you are on a temporary visa or have recently transitioned to permanent residency, this is the stage where your visa status matters. Some lenders treat permanent residents the same as citizens, while others may require a larger deposit or charge a higher interest rate if you are still on a temporary visa. A loan health check before you apply can help identify which lenders are most likely to approve your application and offer competitive terms.

Once your application is approved, the new lender arranges settlement. Your old loan is paid out, and the new loan is registered against your property. From that point, you make repayments to the new lender under the new terms. The entire process usually takes three to six weeks from application to settlement.

What Happens If Your Fixed Rate Is Ending

If your fixed rate period is ending in the next few months, you should start the refinance process at least eight weeks before the expiry date. This gives you time to compare rates, submit an application, and have the new loan ready to settle as soon as the fixed period ends. If you wait until after the fixed rate expires, you will be moved to your lender's variable rate, which is often higher than what you could access by refinancing.

Some lenders charge break costs if you exit a fixed rate early, so refinancing before the expiry date can trigger these fees. Once the fixed period has ended, there are no break costs, and you can switch lenders without penalty. If you are unsure when your fixed rate expires, check your loan contract or contact your lender directly. More detail on this process is available on our fixed rate expiry page.

Accessing Equity Through Refinancing

If your property has increased in value, refinancing lets you access that equity without selling. The lender bases the new loan amount on the current valuation, and you can borrow up to 80% of that value without paying lenders mortgage insurance. If you originally borrowed 90% and have since paid down the loan or seen the property value rise, you may now be able to access equity while staying under the 80% threshold.

As an example, someone who bought a townhouse for $520,000 with a 10% deposit now owes $430,000. The property is now valued at $580,000. At 80% of the new value, they could borrow up to $464,000. That leaves $34,000 in usable equity, which could be released through refinancing and used as a deposit on another property or for renovations. The lender treats this as a cash out refinance, and the application process is the same as a standard refinance, with the additional step of specifying how the released equity will be used.

What Documents You Will Need

The documents required for a refinance application are similar to those you provided when you first bought. You will need recent payslips covering at least the last three months, your most recent tax return and notice of assessment, and bank statements showing your savings and spending patterns. If you are self-employed, the lender may ask for two years of tax returns and business financials.

You will also need to provide details about your current home loan, including the loan account number, current balance, and the name of your lender. If you have other debts such as car loans or credit cards, the lender will ask for statements showing the current balance and repayment amounts. For new migrants, you may also be asked to provide proof of visa status, such as a copy of your visa grant notice or evidence of permanent residency.

How Long the Process Takes

From the time you submit your application to the time the new loan settles, the process typically takes four to six weeks. The timeline depends on how quickly the lender can complete the property valuation, assess your application, and arrange settlement. If your application is straightforward and all documents are provided upfront, some lenders can settle in as little as three weeks.

Delays usually occur when additional information is requested or when the valuation comes in lower than expected. If the valuation is lower than the purchase price or the amount you believe the property is worth, the lender may reduce the loan amount or decline the application. In that case, you can either accept the lower amount, provide evidence to support a higher valuation, or apply with a different lender who may use a different valuer.

Switching Between Fixed and Variable Rates

When you refinance, you can choose to switch to variable, switch to fixed, or split your loan between the two. A variable interest rate moves up and down with the market, which means your repayments can change. A fixed interest rate locks in your repayments for a set period, usually between one and five years, giving you certainty but less flexibility.

Many people who came off a fixed rate and experienced a sharp increase in repayments choose to lock in a portion of the new loan while leaving the rest variable. This approach lets you benefit from rate cuts on the variable portion while protecting yourself from further rate rises on the fixed portion. The split you choose depends on your risk tolerance and how important payment certainty is to your household budget.

Working With a Mortgage Broker

A mortgage broker compares loan products across multiple lenders and handles the application process on your behalf. For new migrants, this can be particularly useful if you are unfamiliar with how Australian lenders assess visa holders or if your income structure is less common. Brokers also know which lenders are more flexible with recent arrivals and which ones require longer employment history or higher deposits.

Brokers are typically paid by the lender, not by you, so there is no upfront cost for their service. They submit your application, liaise with the lender, and keep you informed as the process moves forward. If your application is declined, they can help identify why and suggest alternative lenders who may take a different view. If you are considering investment loans or accessing equity for a second property, a broker can structure the refinance in a way that supports your longer-term goals.

What Happens After Settlement

Once the new loan settles, your old loan is closed and your new repayments begin. You will receive a new loan contract, and your repayments will be set up with the new lender. If you have an offset account or redraw facility, you can start using these features immediately. Any automatic payments linked to your old loan account will need to be redirected to the new account, so check any direct debits and update them as needed.

Your old lender will send a discharge letter confirming the loan has been paid out. Keep this for your records, as it is proof that you no longer owe anything on the old loan. If you had lenders mortgage insurance on the old loan, this does not transfer to the new loan. If your new loan requires insurance, it will be a separate policy and premium.

Refinancing is not a one-time decision. Many people review their home loan every few years to make sure they are still getting a competitive rate and the features they need. If your circumstances change, whether that is a pay rise, a new dependent, or a plan to buy another property, a loan review can help you adjust your borrowing structure to match.

Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions