What Is Refinancing A Home Loan

Refinancing involves changing your existing loan and moving it with a new one that better suits your current needs. Refinancing has the potential to result in significant savings, and it's possible to refinance with your current lender. However, the new loan should come with improved rates and terms designed specifically for your individual situation.

Koalify help simplify the process of finding the ideal loan for you with a free complimentary home loan health assessment. Use our free refinance savings calculator to easily see how much you could potentially save.

How Refinancing Could Save You Thousands!

1. Lowering Expenses: By securing a lower interest rate, you can effectively decrease your monthly mortgage payments.

2. Accelerating Loan Repayment: With flexible loan terms, you gain greater control over your repayment schedule, potentially shortening the duration of your home loan by several years.

3. Leveraging Home Equity: Refinancing allows you to tap into the equity in your home, providing access to cash for various purposes such as home renovations, vacations, or upgrading your vehicle.

4. Gaining Financial Control: Consolidating your other debts into your mortgage can lead to reduced interest rates and a clearer overall financial outlook.

5. Loan Features: Access additional loan features like redraw or an offset account.

The Risk of Refinancing a Home Loan

The major risk associated with refinancing a home loan is the expense that comes with it. This must be carefully considered if your goal with refinancing is to explore possible savings.

The fees and potential LMI can easily eat into what you could potentially save. 

Consider This When Refinancing

According to Moneysmart, you should carefully consider and compare the loan terms and costs when refinancing.

This helps to ensure you can actually save money in the long-term.

Once you have the loan terms figured out, use our free refinance savings calculator to easily find out how much you could save your new loan based on the loan terms alone.

Apply the new refinancing expenses you could be paying against the savings figure to get the final savings amount.

Koalify helps you find the most suitable refinancing solution depending on your finances and goals.

With us, you’ll get:

• Access to 2,000+ loan options from 30+ top banks in Australia (the Big Four + local banks).

• Competitive loan terms.

• Accurate figures of new loan terms and associated expenses.

• Accurate estimates of your potential savings.

And we handle the process for you from start to finish, at zero commission or broker fees!

Contact us today if you’re interested in finding the right refinancing solution.

Why You Should Consider Refinancing Your Home Loan

Most borrowers often resort to automatically paying their mortgage for the entire life of their loan term.

Avoid this 'set and forget' mentality when it comes to your loans. You might be overpaying. 

According to the Australian Competition & Consumer Commission (ACCC), Australians with loans that are 3–5 years old are, on average, paying an additional 0.58% over the loan's lifespan.

Even a single percentage point can have a significant impact. For instance…

If you have a $500,000 home loan with an interest rate of 6%, and you're paying 0.58 percentage points more than the best available rate, you're essentially paying more than necessary in interest. 

This translates to an average of $250 extra per month, $2,900 per year, and $87,000 over a 30-year loan term. 

Wouldn't it be wiser to channel that money into savings instead of paying it in interest? Over time, it could accumulate enough to be used on a wide variety of things like a holiday, a new car, school fees etc. 

And refinancing is the best way you can secure a new mortgage solution where you can bring these savings into effect.

Refinancing Costs

Refinancing a home loan comes with a set of expenses that are to be paid to your existing lender, new lender, and your State/Territory government.

Here’s a breakdown of the costs associated with refinancing you can expect:

• Discharge Fee: This is the fees paid to your existing lender to cover the administration fees of paying down all your current mortgage dues. It may range from $150–$500, depending on your lender, home loan, dues, etc.

• Break Fee: If you’re refinancing while being in a fixed-rate mortgage and the fixed rate’s tenure is ongoing, you’ll have to pay a fee to break this fixed loan term.

• Application Fee: If you’re refinancing with a new lender, they may charge an application fee of up to $1,000 to cover the costs of setting up your new loan. It depends on your lender and loan type, but some lenders may waive this fee.

• Valuation Fee: You might have to complete an updated property valuation if it’s been a few years since you bought your property. This could potentially cost $100–$600, depending on the scale of the valuation.

• LMI: Lender’s Mortgage Insurance (LMI) is required on home loans with over 80% LVR. If you don’t have at least 20% equity in your home, you’ll likely have to pay LMI.

  • LMI is a type of insurance that protects your lender in case you default on your home loan, but it is paid by you.

  • Most lenders charge 1–5% of the home loan as LMI.

  • You can potentially waive off LMI even if your LVR is over 80%, by using a Guarantor or utilising the benefits of your profession, like the LMI waiver for teachers and other professions that some lenders provide.

• Mortgage Registration Fee: This is the fees you are required to pay to your State/Territory government every time you open a new mortgage against your property title.

  • Although the registration fee is paid to your State/Territory government, it is collected by your lender. Kindly confirm the fee amount with your lender, as it depends on your State/Territory.

Refinancing a Home Loan: Is It Right for You?

Refinance is a great option if:

• You need a lower interest rate to reduce your repayments.

• Your financial health has improved, which could potentially qualify you for more favourable loan terms.

• You want to access your home equity for renovations, investments, or other financial goals.

• You need additional features like an offset account or redraw facility.

That said, keep in mind that loan approvals are subject to each lender’s credit criteria, requirements, and ongoing terms and conditions. You may or may not qualify for all products.

Please note the information provided here is general in nature and does not constitute financial advice. It does not take into account your individual objectives, financial situation, or needs. Kindly consider seeking professional advice before making any financial decisions.

Why Refinance Your Home Loan With Us?

Free of Charge

Our commitment is to serve in your best interests by identifying the most suitable lender for you, and we do so without any cost to you, now or in the future.

Your Best Interest

We comply with the Best Interests Duty (BID) as set out by the National Consumer Credit Protection Act (NCCP Act).

Driven by both legal requirements and our unwavering ethical principles, our primary focus is on your best interests, always placing them ahead of our own.

Comprehensive Loan Support

Throughout the entirety of your loan journey, we take on the responsibility of managing it on your behalf. 

This includes conducting regular check-ins to ensure you continue to enjoy the most favourable rates and accommodating any minor adjustments you may require. We're dedicated to being with you for the duration of your loan.

All loan examples, interest rates, and other figures cited are for illustrative purposes only and may not reflect current market conditions or your personal eligibility. Actual rates, fees, and savings vary based on lender requirements, credit criteria, and your unique circumstances.