Refinancing in Australia (2026 Guide)

If you took out a home loan a few years ago, you're probably paying more than you need to. Banks love loyal customers because loyal customers don't shop around.

Refinancing is when you switch your home loan to a new lender (or negotiate a better rate with your current one). It's not complicated, but it does require paperwork and a bit of maths to figure out if it's actually worth it.

Here's everything you need to know about refinancing in 2026.

Why refinance?

Most people refinance for one of three reasons:

• Lower interest rate — Your current rate is higher than what new customers get
• Better loan features — Offset account, redraw, lower fees
• Access equity — Borrow against your home's increased value

The biggest reason is usually the interest rate. If you can drop your rate by even 0.25%, you could save thousands per year on a typical mortgage.

How much can you save?

Let's say you have a $500,000 loan with 25 years remaining at 6.5%. If you refinance to 6.0%, you'll save:

• $145/month in repayments
• $43,500 total over the life of the loan

Even a 0.5% drop is huge. Use our Refinance Calculator to see your exact numbers.

When refinancing makes sense

Refinancing isn't always worth it. Here's when it usually is:

• Your current rate is 0.5% or more higher than what's available
• You have at least $200k+ remaining on your loan (bigger savings)
• You have at least 2-3 years left on your loan term
• Your property value has increased (more equity = better rates)

If your loan is almost paid off or you're planning to sell soon, refinancing probably isn't worth the hassle.

Costs of refinancing

Switching lenders isn't free. Common costs include:

• Discharge fee: $150-$400 (your old lender)
• Application fee: $0-$600 (new lender)
• Valuation fee: $0-$300 (sometimes waived)
• Settlement fee: $100-$300
• LMI (if applicable): $0-$10,000+ (if borrowing >80% LVR)

Total typical cost: $500-$1,500 (without LMI).

This is why the break-even calculation matters. If you're saving $145/month but paid $1,000 in fees, you'll break even in about 7 months. After that, it's pure savings.

The break-even point

Your break-even point is how long it takes for your monthly savings to cover the upfront costs.

Formula: Upfront costs ÷ Monthly savings = Break-even (months)

Example:

• Upfront costs: $1,200
• Monthly savings: $150
• Break-even: 8 months

If you're planning to stay in your home for longer than 8 months, refinancing is a no-brainer.

Use our Refinance Calculator to calculate your exact break-even point.

How to refinance (step by step)

1. Check your current loan

Find out your current rate, remaining balance, and any exit fees. Check if you're in a fixed-rate period (you might have break fees if you exit early).

2. Shop around

Compare rates from at least 3-5 lenders. Don't just look at the interest rate — check fees, features, and reviews.

Use a mortgage broker (free for you, lender pays them) or compare yourself on sites like Canstar, RateCity, or Finder.

3. Apply

Once you've picked a lender, submit an application. You'll need:

• Proof of income (payslips, tax returns)
• ID (driver's license, passport)
• Current loan statements
• Property valuation (lender organizes this)

4. Approval & settlement

If approved, the new lender pays out your old loan and sets up your new one. This usually takes 4-6 weeks.

5. Start saving

Your new repayments kick in. Track how much you're saving each month.

Should you use a mortgage broker?

Brokers are free for you (they get paid by the lender). They can:

• Compare dozens of lenders at once
• Handle all the paperwork
• Negotiate better rates (sometimes)

Downside? They only recommend lenders they work with, so you might miss out on some direct-only deals.

Verdict: If you're time-poor or overwhelmed, use a broker. If you like doing research, go direct.

Can you negotiate with your current lender?

Yes. Call your bank's retention team and say you're thinking about refinancing. They'll often drop your rate by 0.2-0.5% to keep you.

This is the easiest option because there are no upfront costs. But you might not get the absolute best rate.

Try this first. If they won't budge, then refinance.

Fixed vs variable when refinancing

When you refinance, you'll need to choose:

• Variable rate: Changes with the market, usually has more features (offset, extra repayments)
• Fixed rate: Locked in for 1-5 years, more predictable, fewer features

In 2026, most people are going variable because fixed rates are higher and the RBA might start cutting rates soon.

Read our full guide: Fixed vs Variable Rates Explained.

Common refinancing mistakes

• Only looking at the rate — Fees and features matter too
• Not calculating break-even — You might not save anything if costs are high
• Extending your loan term — Lower repayments but more interest overall
• Ignoring your current lender — They might match a competitor's rate
• Refinancing too often — Costs add up, aim for once every 2-3 years max

Is refinancing worth it in 2026?

If you're on an older loan with a rate above 6%, absolutely. The market is competitive right now and lenders are desperate for new customers.

Even if you refinanced a year ago, it's worth checking. Rates have dropped and you might qualify for a better deal.