5 Signs It's Time to Refinance Your Home Loan

Most Australians set and forget their home loan - and it costs them. The lending market moves quickly, and what was a competitive rate two years ago may now be significantly above the market average.

We speak with borrowers every week who are sitting on rates that are 0.5%, 1%, even 1.5% higher than what they could access today. On a $600,000 loan, that's a difference of $3,000–$9,000 per year in interest charges. Over five years, that's potentially $45,000 lost to inertia.

Here are five clear signs it's time to review your home loan.

1. You Haven't Reviewed Your Loan in 2+ Years

The home loan market in Australia is highly competitive. Lenders regularly adjust their rates, introduce new products, and offer cashback or switching incentives to attract new customers. If you haven't had a loan review in the last two years, there's a very good chance you're not on the most competitive rate available to you.

This is especially true if rates have moved significantly since you settled - either up or down. When rates rise, lenders often sharpen their introductory offers to attract new business, while existing customers stay on older, higher rates. Don't assume loyalty is rewarded. In home lending, it rarely is.

2. Your Rate Starts With a "5" or Higher

At the time of writing, competitive variable rates for owner-occupiers with strong equity and income are well below 6%. If your current rate starts with a 5 or higher, you should be asking whether you could do better.

The benchmark to assess your rate: compare it to the average of the big four banks versus specialist lenders. Your broker can pull this comparison in minutes. Even a 0.3% reduction on a $550,000 loan saves you approximately $1,650 per year - and roughly $8,000 over five years.

The comparison shouldn't just be about the rate. Product features matter too - an offset account, unlimited extra repayments, and a competitive redraw facility can be worth as much as the rate itself.

3. Your Circumstances Have Changed

Refinancing isn't only about chasing a lower rate. It's also about making sure your loan structure still matches your life.

Common life changes that should trigger a loan review:

• Your income has increased - higher earnings may unlock better rates or allow you to borrow more to access equity
• You've built significant equity - moving from a high LVR (85–95%) to below 80% typically gives you access to better rates and removes LMI
• You've had a child - your cash flow needs may shift, and an offset account or redraw facility may now be more important
• You're nearing retirement - your risk tolerance and loan structure may need to change
• You're starting a business - lenders assess self-employed borrowers differently, and your current loan terms may not reflect your new income profile

Any of these changes warrants a conversation about whether your current loan is still the right fit.

4. You're Paying LMI on a Loan That No Longer Needs It

Lenders Mortgage Insurance (LMI) is required when your loan-to-value ratio (LVR) exceeds 80% - typically paid as a one-off premium at settlement when you have a smaller deposit.

But here's something many borrowers don't realise: as your property value increases and your loan balance reduces, your LVR drops. Once you're below 80% LVR, you no longer need LMI protection - and if you refinance to a new lender, you won't be charged it again.

You might also be eligible for a partial LMI refund from your original lender if you refinanced within a certain period. This is worth checking.

The practical point: if you bought with a 10% deposit two years ago, and your property has grown in value, you may now have over 20% equity. That's a strong position to refinance from - and a good rate is likely waiting for you on the other side.

5. Your Loan Features No Longer Match Your Needs

When you took out your original loan, you chose features based on your situation at the time. Needs change. Features that seemed unimportant may now be essential.

Common feature mismatches we see:

• No offset account - if you've accumulated savings, an offset account reduces your daily interest calculation, often saving more than a rate cut
• Fixed rate that's now rolling off - when a fixed term ends, loans revert to the lender's standard variable rate, which is often not competitive
• No ability to make extra repayments - if you're earning more and want to pay down faster, a loan that restricts extra repayments is holding you back
• No split-loan facility - if your priorities have shifted between certainty and flexibility, a split arrangement (part fixed, part variable) may serve you better now

So What Does Refinancing Actually Cost?

A common concern is refinancing costs. Here's the reality:

• Break fees (for fixed loans being broken early): can be significant - but often zero or very low at the end of a fixed term
• Discharge fee: typically $150–$400 from your current lender
• Application/settlement fee: some lenders charge, many don't - we only recommend lenders where switching costs are minimal
• Lenders Mortgage Insurance: not applicable if your LVR is below 80%
• Cashback offers: many lenders offer $2,000–$4,000 cashback for refinancing to them, which often covers or offsets switching costs entirely

In most cases, if you can reduce your rate by 0.3% or more and you're staying in the loan for at least 12–18 months, refinancing pays for itself quickly.

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If any of these signs apply to you, don't wait. Book a free loan review with us - we'll compare your current loan against 30+ lenders, show you exactly what you could save, and handle the entire switch if you decide to proceed.

There's no obligation, and no cost to you.