Is now a good time to refinance your mortgage?

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Home Loan Tip

How do you know when it's a good time to refinance your mortgage?

refinance home loanMost experts recommend that you conduct a financial health check at least every 3 years and that you review your home loan at least once a year.

But how do you know when it's a good time to refinance? Is it as soon as you've sourced a better rate? Is it when your existing mortgage no longer matches your needs? Or is it when the cash rate is expected to fall?

It's a difficult question, so we put it to our panel of home loan and finance experts. Here's what they had to say (plus some things to think about before you decide to refinance your mortgage).

If you're looking to refinance or you'd like to compare refinance home loans, check out our comparison of refinancing loan options.

It may be a good time to refinance if:

The right time to refinance will largely depend on your personal situation and you should discuss your options in detail with a mortgage broker, accountant and financial planner to ensure that refinancing makes financial sense for you.

Generally, it may be time to switch to a new lender when:

  • You're lender's interest rate is no longer competitive
  • You encounter a major financial or lifestyle change (e.g. starting a family or starting a new job)
  • You're looking for features that your existing home loan does not offer (e.g. the ability to access equity in existing property or the ability to make unlimited additional repayments)
  • You would like to switch to a fixed-rate or split-rate loan to take advantage of a low-interest rate environment (and if you believe interest rates are likely to rise in the near future)
  • You need to consolidate debt

Learn more about the refinancing process to decide whether refinancing is right for you.

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A mortgage broker can help you refinance.One of the most common reasons to refinance your mortgage is to find a more competitive interest rate to lower your repayments, but there are several lifestyle and financial factors you need to consider before making the move.

These include:

  • Lifestyle needs. Whether you're thinking of renovating or starting a family, you need to consider how your lifestyle will impact your borrowing needs. For instance, if you'd like to access equity you have in existing property to help fund a renovation you may want to consider refinancing to a line of credit (LOC) or home equity loan or a mortgage that offers an offset account and redraw facility.
  • Financial situation. You should talk to a financial adviser or accountant to help plan your budget for the future, and to help you decide whether now is the right time for you to refinance. A mortgage broker can help you understand how much you can afford to borrow so that you can comfortably meet your repayments. Any change in your personal situation may also affect your borrowing capacity so make sure you factor this into your budget plan. For example, if you plan to have kids you may want to ensure that you have a contingency buffer for unexpected medical expenses or a high-interest savings account to help fund tuition fees.
  • Job security. The security of your current employment is another key factor to consider when deciding whether now is an ideal time to refinance. This is because many lenders consider employment as an indicator of reliable income which demonstrates that you can service the loan. If you are between jobs or you are only employed on a casual or part-time basis, now may not be a good time to refinance.
  • Refinancing costs. The cost of refinancing your home loan will largely influence your decision about whether or not now is the right time for you to switch lenders. You'll need to account for discharge fees ($150 - $350) charged by your current lender as well as upfront application fees charged by the new lender. Use our switching cost calculator to estimate your total refinancing costs. Remember to consult your accountant or financial planner to assist you with these calculations.
  • Find a good broker. Speak with a mortgage broker to discuss the type of loan that will complement your borrowing needs. They will be able to review your financial and personal situation to help you reach a decision about whether now is the right time to refinance.
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Panel of home loan and finance experts - Is now a good time to refinance your mortgage?

Noel Whittaker

Finance Expert, Sydney Morning Herald

The fact that the banks are urging us to refinance to a fixed rate is probably a good reason not to do it. The problem with fixed rates is the inflexibility – in most cases you can't make extra repayments. However, there are some fixed rate loans that do allow repayments of a small amount of principal. Also, fixed rate loans can have heavy exit fees – the average house changes hands every seven years and often people's circumstances change and they are forced to change and incur exit costs.

You lose out if you take a fixed rate and rates fall because you miss out on the lower variable rate and at the same time open yourself to potentially heavy exit fees. However, if rates rise, you have locked in the present cheap rate and exit fee should be minimal as the base would be happy to get out of a cheap loan and re-lend the money to someone else a high rate.

Belinda Williamson

Head of Corporate Affairs, Mortgage Choice

In an environment of falling interest rates and intense competition between lenders, it makes good financial sense for borrowers to regularly check if your existing home loan offers a competitive interest rate, charges minimal fees and value-for-money features suited to your lifestyle and needs.

With new products constantly entering the home loan market, borrowers should be taking the time to regularly assess their loan situation at least once a year to ensure it meets their current needs and future investment goals, and to see if there are any new deals that might benefit them.

Heidi Armstrong

Director, State Custodians

The number of first home buyer’s entering the market is at its lowest in 21 years - the government therefore needs to establish the necessary stimulus via FHB grants and stamp duty exemptions.

The RBA cannot be expected to address issues faced by smaller market segments in isolation from the broader issues. The vast majority of homeowners have the power to give themselves a 0.25% rate cut simply by making smarter decisions such as refinancing to a cheaper and more flexible home loan product.

Rob Dawson

Representative, Charter Financial Planning

Your decision of when to refinance your mortgage is affected by your expectations about your capacity to repay the debt as well as your job security. Typically when interest rates are low, an individual with a secure job may feel more comfortable with the application process to consolidate debt, possibly at a new lower rate.

On the other hand, if the economy is weak and your perceptions of future job security are low, you may not feel comfortable about doing it. However, consolidating debt ahead of any period of instability can be a good move if your repayments are more manageable later.

The most difficult period or time to refinance is obviously if you cannot show stable income and work patterns to prospective lenders.

Compare refinancing home loan rates

Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier Special Rate, P&I)
Owner-occupiers can lock in a competitive rate with no ongoing fees. Conditions apply.
3.74% 4.85% $0 $0 p.a. 95% Go to site More info Essentials - Variable (Owner Occupier, P&I)
A basic home loan with a competitive rate and low fees.
3.64% 3.66% $0 $0 p.a. 80% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.49% 4.47% $0 $375 p.a. 85% Go to site More info
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.85% 3.86% $0 $0 p.a. 90% Go to site More info
Reduce Home Loans Rate Buster 100% Offset Variable Home Loan - Up to $750k (LVR <=80%)
Borrow up to 80% LVR with no ongoing fees and a 100% offset account.
3.54% 3.54% $440 $0 p.a. 80% Enquire now More info Offset Variable - Up to 80% LVR (Owner Occupier P&I)
Take advantage of a 100% offset account along with no annual or application fees.
3.72% 3.74% $0 $0 p.a. 80% Go to site More info
IMB Budget Home Loan - Special LVR <=80% (Owner Occupier and Principal & Interest only)
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.79% 3.84% $445 $0 p.a. 80% Go to site More info
Tic:Toc Live in Loan Variable Rate
A competitive variable rate product with low fees offered by a 100% online lender.
3.68% 3.69% $0 $0 p.a. 80% Go to site More info
Bank Australia Basic Home Loan - Variable (Owner Occupier)
Pay no ongoing fees on a competitive variable rate home loan.
3.86% 3.87% $0 $0 p.a. 80% Go to site More info
UBank UHomeLoan Variable Rate - Standard Variable Rate Value Offer (Owner Occupier P&I)
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
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Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at Talk to him to find out more about home loans.

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Bank Australia Basic Home Loan - Variable (Owner Occupier)

Pay no ongoing fees on a competitive variable rate home loan.

NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I)

A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)

Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.

IMB Budget Home Loan - LVR <=90% (Owner Occupier)

Get a competitive rate without features you may not use.

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2 Responses

  1. Default Gravatar
    RuthMay 26, 2015

    I am separated from my partner the deed to the home of 7 years is in my name but I refinanced 3 years ago for renovations and we put his name on the mortgage. Can I refinance the house back in my name again without him

    • Staff
      BelindaJune 1, 2015Staff

      Hi Ruth,

      Thanks for reaching out to is an online comparison service so we cannot provide you with specific advice regarding your situation.

      You can read more about financing your mortgage after separation on this page.

      Your best course of action would be to seek legal advice or contact your broker.


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