How to refinance a home loan, step by step

Step 1: Know your numbers

Write down your loan balance, rate, remaining term, repayments, any fixed-rate end date, and your property's estimated value. Divide the balance by the value to get your loan-to-value ratio. What LVR means explains why lenders care. If you are under 80%, you are in the position to get the lender's better rates. If you are over 80%, a new lender may charge lenders mortgage insurance.

Step 2: Ask your current lender first

Moneysmart suggests telling your current lender that you plan to switch to a cheaper loan offered by a different lender. It is quicker and cheaper than refinancing. Use the call script.

Step 3: Compare lenders on live rates

Open home loan rates and filter to your type of loan. As at 2 Nov 2026, in RateSonar's data for standard owner-occupier variable loans:

• the lowest advertised rate is 5.69% (Aaa Financial Corporation Portfolio Loan, for borrowers borrowing up to 90% of the property value);
• the middle is 6.74%;
• the four major banks' lowest standard variable loans run from 6.34% to 6.79%.

Compare the comparison rate as well as the advertised rate, and read the comparison rate explained. Use compare rates to put up to five lenders side by side, and open a lender's own page, such as Commonwealth Bank, for its full product list. Remember these are advertised rates for new customers who meet each lender's conditions.

Step 4: Add up the costs of switching

Moneysmart lists these:

• Break fee if you are on a fixed rate.
• Discharge (termination) fee to close your current loan.
• Application fee on the new loan.
• Switching fee if you refinance within your current lender.
• Stamp duty, which Moneysmart says you may be liable for when you refinance. Check with your lender.
• Lenders mortgage insurance, which can outweigh the savings if you have less than 20% equity. You can ask for a partial refund of the LMI on your current loan.

Then work out how long the saving takes to cover the costs. Moneysmart has a mortgage switching calculator for this. As a guide, moving a $600,000 loan over 30 years from the middle rate (6.74%) to the lower-quartile rate (6.39%) would cut repayments by about $138 a month, by RateSonar's arithmetic with the rate held constant. Test your own numbers.

Step 5: Check the loan term

A new 30-year term resets the clock. Moneysmart says to keep the new term no longer than your remaining term, or you will pay more interest overall. If a longer term lowers repayments, you can still pay the old amount and shorten the loan.

Step 6: Choose the features you will use

Decide whether you need an offset account, redraw, extra repayments without a fee, and a split between fixed and variable. See how offset accounts work. A loan with extra features can carry a higher rate or an annual fee, so choose what you will use.

Step 7: Apply and gather documents

The lender will ask for identification, recent payslips or income evidence, bank statements, details of debts and credit cards, and your current loan statement. Use the refinancing checklist. The lender will order a valuation and check your credit history and ability to repay. APRA's mortgage serviceability buffer, confirmed at 3 percentage points on 28 May 2026, means lenders test whether you could afford the loan at a rate 3 percentage points above the loan rate.

Step 8: Settlement

Your new lender arranges settlement with your old lender. The old loan is discharged, any fees are paid and the new loan starts. Keep paying your old loan until you are told it has closed.

Step 9: Tidy up after you switch

• Check your offset account is linked to the new loan. Moneysmart notes an ASIC review found some offsets were not linked, so interest savings were lost.
• Move your salary and direct debits if your loan account changed.
• Cancel any old redraw or offset accounts that are no longer needed.
• Set a diary reminder to review the rate in twelve months.

When refinancing is not worth it

• The saving is small and the costs take years to recover.
• You are on a fixed rate with a large break cost.
• You would have to pay lenders mortgage insurance again.
• Your circumstances have changed (income, credit history) and you may not qualify for the best rates.