Refinancing your home loan can make a big difference to the life of your loan. Whether you’re looking to cash in on your home equity, lower your rate, remove a guarantor, or simply choose a new lender who aligns with your long-term financial goals, Freedom Finance Group can help.
With access to over 50 lenders and extensive experience in home equity loans and home loan refinancing, Freedom Finance Group can guide you through the process, ensuring you get the best deal possible
If you’re looking for a mortgage broker to help you refinance, get in touch today for a free consultation. We can help you compare rates, navigate refinancing costs, and find the best solution to suit your financial goals.
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Refinancing means renegotiating the terms of your mortgage—sometimes with a new lender, and sometimes with your existing lender. With the right broker, lender, and loan structure, refinancing can put you in a much better financial position, and it’s worth exploring if you want to pay off your mortgage sooner rather than later.
First, you apply for a new loan with your chosen lender. They’ll review your financial situation, assess the value of your home, and check your current debt before offering their loan terms.
If you meet their requirements, they’ll provide a loan offer with new terms—this could mean a lower interest rate, different loan features, or a different repayment structure. If you accept, you’ll proceed with the refinancing process.
Next, you’ll apply to transfer the debt. This means your new lender will pay off your old lender, officially switching your mortgage over. You may need to pay discharge fees to your current lender, as well as settlement and application fees to the new one. If you’re refinancing to a fixed-rate loan, there may be break costs involved.
Once everything is finalised, your repayments will begin under the new loan terms.
For many, the most important benefit is that you could get a lower rate. Finding a rate that’s lower even by 0.25% could make a world of difference over the life of your loan—lowering your repayments, making your mortgage feel more manageable, and meaning you can pay off your home loan faster.
Many home owners also use refinancing as an opportunity to access equity in their property. This could allow you to pay for a renovation, take advantage of an investment opportunity, or go on a much-needed holiday.
Even if you’re sure you don’t want to refinance, it’s worth doing a home loan health check every few years to make sure you’re still getting a competitive rate.
There are lots of reasons why you might want to think about refinancing your home loan.
If you had a family member step in as a guarantor, refinancing can help you take full ownership of your loan once you’ve built enough equity.
Interest rates change over time, and if you’re stuck on a higher one, refinancing could save you thousands. A lower rate means smaller repayments, leaving more money in your pocket each month.
If you’re in a better financial position, refinancing to a shorter loan term or higher repayments can help you own your home sooner. It could mean paying less interest overall and getting debt-free faster.
Refinancing can help you unlock equity in your home, giving you access to extra funds for renovations, investments, or even a holiday.
Refinancing isn’t always free. Check for exit fees, break costs, and new loan setup fees to make sure the savings outweigh the costs.
A lower rate is great, but does the new loan offer the flexibility you need? Look for features like offset accounts, redraw facilities, or extra repayment options.
Refinancing should align with your long-term plans. Whether you’re reducing repayments, paying off your loan faster, or accessing equity, make sure it supports your financial future.
Refinancing a loan isn’t as intensive as securing your first mortgage, but a lot of the steps are the same. The lender will take a hard look at your finances, so you want to be in good shape.
Lenders will look at your income, credit score, and existing debts to make sure you can handle the new loan. You’ll also need at least 20% equity in your home to avoid paying Lenders Mortgage Insurance (LMI), though some banks might accept less. It’s a good idea to have a steady repayment history on your current loan, as this reassures lenders you’re a low-risk borrower. Depending on the terms of your loan, you may pay exit fees, application fees, and valuation costs.
Let’s have a look at an example of a refinanced home loan in Australia.
Emma, 35, took out a $500,000 home loan five years ago with a 30-year term and an interest rate of 5.2%. Her monthly repayments were $2,750. Over time, interest rates have dropped, and Emma’s property has increased in value to $650,000.
Wanting to take advantage of lower rates, Emma decides to refinance. She secures a new loan of $450,000 at a reduced interest rate of 4.0%, lowering her monthly repayments to $2,400. This saves her $350 per month, or $4,200 per year.
At the same time, Emma chooses to access $50,000 of her home’s equity through a cash-out refinance. She uses this amount to renovate her kitchen and bathroom, which could further increase her property’s value.
When you refinance your mortgage, you’re applying for more credit from the bank, which can cause a dip in your overall credit score. That being said, the dip is temporary, and if you make all your new repayments on schedule, your credit will bounce back quickly.
The exact cost depends on your lender and the terms of your loan, but in most cases, you’ll pay more if you have a fixed mortgage, as this may incur costly break fees. Additionally, you might need to pay exit fees ($200-$1000), application fees ($100-$500), settlement fees ($150-$500) and the cost of having your home valued, if applicable.
Overall, refinancing can cost anywhere from a few hundred to a few thousand dollars, depending on the circumstances.
In general, you should compare your loan terms with the market regularly to make sure your rate stays competitive. However, more specifically, you should consider refinancing when your fixed rate is ending or when interest rates drop.
It may also be time to think about refinancing when you want to reduce your repayments or pay off your loan faster than you are currently, when you want to consolidate multiple debts, or when you need to access equity.
Refinancing can be a great way to lower your interest rate, but there are costs involved—like discharge fees, application fees, and even break fees if you’re leaving a fixed-rate loan early. Plus, if you extend your loan term to lower repayments, you might end up paying more interest in the long run.
It’s also worth checking if you’d lose features like offset accounts or redraw facilities. And while a lower rate might look good now, remember that some loans have introductory rates that increase later so make sure you know what you’ll pay down the line.
There’s no strict limit on how often you can refinance your home, but lenders may not be too keen on borrowers refinancing frequently, as it could indicate financial instability or a higher risk—not to mention lower reward for the bank. However, as long as you meet the lender’s criteria and the financial benefits outweigh the costs, you can refinance as often as you like.
Generally, it’s a good idea to wait at least 2 to 3 years before refinancing, unless you’re making significant changes to your loan or finding a much better deal.
If you’re refinancing simply to get a lower interest rate or better loan terms, you won’t receive any extra cash—the new lender just pays off your old loan, and you continue making repayments as usual. However, some banks do offer cash bonuses of hundreds or thousands of dollars to transfer their loan.
If you refinance to access equity, you can borrow against the value of your home and receive a lump sum. This is known as a cash-out refinance, and many homeowners use it for renovations, investments, or consolidating debts.
Most lenders require at least 20% equity in your home to refinance without paying Lenders Mortgage Insurance (LMI). This means your loan should be no more than 80% of your property’s current value.
If you have less than 20% equity, you may still be able to refinance, but you’ll likely need to pay LMI, which can add thousands.
If you refinance to a loan with a lower interest rate, you may find your monthly payments decrease. However, if you extend the term of the loan (from 20 years to 30 years, for example), your payments might go down, but you’ll end up paying more interest over the life of the loan.
On the other hand, if you refinance to a loan with a higher interest rate or shorten the term of your loan (say from 30 years to 15 years), your monthly payments could increase. Additionally, if you’re accessing equity in your home, this will raise your monthly payment.
The process of finding and applying with a lender can take weeks or months, depending on the complexity of your case. Once you’ve found your lender, and agreed on the terms, the loan progresses to the settlement stage.
When you refinance, you are subject to the same settlement period as when you apply for a new home loan—usually six weeks, although this can be waived if agreed by you and the lender.
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We throughly assess your financial situation, including your income, expenses, credit history, and long-term goals
We compare interest rates, loan terms, fees, and other factors to find a deal that aligns with your needs.
We finalise all the paperwork and coordinate with other parties, such as lenders and conveyancers, to ensure your loan is approved.
Your mortgage journey doesn’t end at settlement. As it evolves, our experts remain by your side.
If you need help with your guarantor loan or want to see if you quality for a no or low deposit home loan get in touch with us today by giving us a call or booking a free consultation.
