Home Loan Refinance Rates

Compare a range of home loan refinance rate offers to find the best new mortgage for you with Savvy.

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, updated on August 7th, 2023       

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There’s a wide range of potential benefits when it comes to refinancing your mortgage, but it’s important to lock in the best interest rate you can when doing so. Fortunately, you can compare a variety of home loan refinance offers right here with Savvy. Consider the lowest interest rates and top features to find the best home loan refinance for your needs all in one place.

How does home loan refinancing work?

The idea of refinancing your home loan is quite a simple one: you’re essentially switching home loans. This is achieved by taking out a new home loan to pay off your existing one, effectively replacing its repayments with those of your new loan instead.

You can refinance your home loan internally with the same lender (simply switching to another of their home loans) or you can move to another lender’s service instead. This gives you a great deal of choice when it comes to your refinance options, providing you with the ideal platform to secure a great deal.

Of course, it’s not as simple as emailing your lender and asking to switch to a different product: there are many steps and requirements involved in the process which are important to know about before, during and after you submit your formal application.

Home loan refinance rates in themselves aren’t an entirely different type of interest compared to any other home loan rate; in fact, they’re basically the same. This is because any loan you refinance to is considered a new loan, regardless of how long you’ve spent paying your previous mortgage.

Why should I refinance my home loan?

Quite simply, many people refinance their home loan to access lower mortgage refinance rates. The reasons for doing so are clear: the lower your mortgage rate, the more you’re likely to save on your home loan overall. It’s important to understand how much you can truly save by doing this, which is demonstrated in the example below using our home loan repayment calculator:

James is currently paying off his home loan and has an outstanding debt of $500,000 with 25 years left to run. If he stuck with his current home loan, which has an interest rate of 2.5% p.a., he’d pay a total of $172,925 in interest alone (based on monthly repayments).

However, James is considering refinancing his loan to one with another lender which boasts a 2% p.a. interest rate. If he were to refinance his loan and move to a mortgage with this new lender, he’d only pay $135,782. This means he’d save more than $37,000 over the remainder of his loan by switching to another with just a 0.5% p.a. saving.

Of course, there’s a variety of other reasons why someone might wish to refinance their mortgage. You may lean towards one of these or a combination of multiple. These include:

Reducing your loan’s fees

It’s not just about interest rates when it comes to saving money, as cutting down on the fees charged on your loan can also make a big difference. These may come in the form of ongoing or annual fees, which can add up over the life of your loan. For instance, switching your home loan from one which charges a monthly fee of $15 to one with a $5 charge can save you $3,000 in itself over 25 years.

Accessing home equity

If you’ve been paying down your loan for some time and have established some home equity, you might wish to refinance your loan to access some of it. This equity can be added to your loan for a variety of reasons, such as helping you conduct renovations, consolidating existing debts, freeing up cash to use as a deposit for an investment property or simply to help with urgent expenses.

Changing your home loan term

You can benefit a considerable amount from shortening your home loan term, which is achievable with a home loan refinance. For instance, you’d pay $172,925 in interest over the final $500,000 and 25 years of your home loan. However, while shortening your term by five years would increase your monthly repayments by over $400, it would also reduce your interest bill by well over $35,000 without changing its rate.

Adding features to your loan

Additionally, you might want to refinance to gain access to further features on your home loan to allow you to save money. A popular home loan feature is a mortgage offset account, which enables you to deposit additional funds into an attached account to reduce your loan principal and the interest payable on it. For example, a $400,000 loan debt with $30,000 stored in an offset account would only have interest payable on $370,000 of it.

What is the cost to refinance my home loan?

There are many factors which go into determining the cost to refinance home loans which are important to bear in mind. You should always weigh these up before committing to the refinance, as you may find that they partially, or wholly, negate the benefit of switching home loans in the first place. These include:

  • Discharge fees: these are charged to cover the administrative cost of closing your loan account. Your mortgage discharge fee will generally cost around $300 to $500 on average, but some lenders charge more than others.
  • Early exit costs: if you’re in the middle of a fixed rate home loan term, you’ll have to pay fees in order to refinance your loan. This is because the contract you’ve signed with your previous lender will be broken. The cost of the fee will depend on the size of the loan and how long is left to run.
  • Valuation fee: switching to a new lender is likely to result in an additional valuation of your home. A fee of $100 to $300 will cover your lender’s assessment of the property to give them an idea of what it’s worth today.
  • Switching fee: if you decide to stay with your current lender but switch to a different loan, you may be charged a switching fee to do so. This will also vary in price quite significantly, but you can expect to pay in the range of $300 to $500.
  • Application fee: many lenders will also charge a fee to open your new account, as you’re likely to have paid at the beginning of your current loan. This can vary in price from $200 to $700, although some will also be willing to waive the cost entirely.

Top tips for getting the best home loan refinance rates

Compare home loan refinance offers with Savvy

The best way to educate yourself on which home loan is right for your needs is to compare with Savvy. We’re partnered with a range of mortgage lenders who are ready to work with you and can offer highly competitive rates to maximise your savings switching from one home loan to another.

Put up a substantial deposit

In terms of how much you need for a deposit, the greater the amount you’re able to put up, the greater your chances are of securing a low interest rate. This is especially the case for borrowers who’ve paid off a significant portion upwards of 40%, as these loans present a much lower risk to lenders, some of whom are willing to lower their rates as a result.

Boast a strong repayment history

Showing that you haven’t had any issues with repaying your home loan in the past will always give you a boost when it comes to working with a new lender. Alternatively, you might be offered a rate discount from your current lender on a new loan as a reward for your reliability in repaying your loan.

Negotiate with your lender

Ultimately, you may not need to refinance and pay various fees at all to access a great interest rate. If there are other lenders in the market offering markedly lower rates than what you’re receiving, it might be worth asking your current lender if they can lower their rate, which many will do to allow them to keep you on as a customer.

Common home loan refinance questions

How long does the mortgage refinance process take?

This depends on the complexity of your profile and the nature of the refinance in the first place. If you’re conducting an internal refinance, for instance, you can expect it to take less time, as your lender will already have all your documents and personal details on file. This may take as little as a few days to a week. However, refinancing to another lender might take several weeks to fully process. You should allow yourself ample time where possible for your lender to complete your application.

When should I not refinance my mortgage?

There are several instances where you may find a refinance isn’t suitable. It’s never ideal to do so soon after you take out your first mortgage to begin with, as that may not look good to lenders. The set-up costs may also not be worth it, particularly if your outstanding debt is low and/or you’re close to the end of your term.

Can I refinance to a different interest rate type?

Yes – you can refinance your home loan to switch from a variable rate to a fixed rate and vice versa. However, as mentioned earlier, you should be aware of the costs associated with breaking the terms of your fixed rate contract before doing so.

Will I have to pay stamp duty twice when refinancing?

No – you’ll only need to pay stamp duty on the actual purchase of your property, so you won’t need to worry about any subsequent loan switching or refinancing having an impact on stamp duty.

If I’ve paid off less than 20% of my home loan, will I have to pay LMI?

Yes – if you took out your original home loan with a sub-20% deposit and are yet to reach 20% equity in your home, you may have to pay Lenders Mortgage Insurance (LMI) again. You may be better off waiting until your home equity hits 20% before refinancing, as the thousands of dollars spent towards LMI may outweigh the potential interest saving in that time.

Will taking a guarantor off my mortgage increase my refinance rate?

It may – guarantors are often used by first homebuyers to help circumvent 20% deposit requirements and a lack of prior credit history, as adding them to a mortgage reduces the level of risk posed in the eyes of lenders considerably. However, you may refinance to remove them in the future, which could result in an increase in rate if your deposit is still below 20% or you haven’t been repaying your loan long enough to establish a strong repayment history. This won’t always be the case, though, so it’s useful to reach out to your lender for an indicative rate without your guarantor.

Will my rate decrease if I switch from a low doc home loan to full doc?

Yes – low doc home loans come with higher interest rates because they’re considered riskier than other loan types. This is because the borrower isn’t supplying full financials in the same way a standard applicant would, meaning the lender is inherently taking a greater risk in approving the application. If you’re able to switch to a full doc loan down the line, such as if you’re self-employed and have gained access to the required two years of tax returns, you can receive a reduced interest rate offer from your lender.

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