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How to Switch Home Loans and Lenders

The homework you need to do before switching your home loan

switching home loans

Changing your home loan can lead to monetary savings and you can also benefit through various features that are not a part of your existing loan. However, switching loans comes with its share of fees, so you should weigh the pros and cons before making the switch.

What is ‘switching home loans’?

Your financial situation changes all the time and sometimes existing home loans can seem like burdens. The good thing is that people with home loans have the option to change their existing loans to new ones, which can come with lower repayments as well as other useful features. Generally, people may want to switch their home loans for the following reasons:

  • Looking for better interest rates
  • Looking for a longer term and lower repayments
  • Looking for additional funds
  • Looking for increased or decreased flexibility which can include easy access to funds as well as wanting to do away with access to funds
  • Having to deal with financial instability

Once you’ve decided that you want to go forward with the switch, you have to narrow your options down to a suitable home loan offered by either your existing lender or a different lender. You need to get in touch with your existing lender to inform them of your desire to switch and at this point your lender may offer you a better deal. If you do decide to move forward with the switch, what basically happens is that you apply for a new loan and use proceeds from the same to pay off your existing loan completely.

For example, if you owe $75,000 on your existing home loan, you can get a new loan for the same amount and this money goes towards paying your existing loan. To qualify for the new home loan, the application process remains pretty much the same as when you originally applied for a loan.

Compare refinancing home loans

Rates last updated June 25th, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.69%
3.69%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more (new or refinance). Terms and conditions apply.
3.64%
3.66%
$0
$0 p.a.
80%
Pay no ongoing fees and enjoy a flexible repayment schedule, including the ability to make unlimited additional repayments without penalty.
3.69%
3.69%
$0
$0 p.a.
70%
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.69%
4.11%
$0
$395 p.a.
80%
Save on interest with a 100% offset account and save on other ME products with this package loan.
3.64%
3.67%
$0
$0 p.a.
80%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments.
3.52%
3.53%
$0
$0 p.a.
80%
Go from application to approval in as little as 20 minutes with a variable rate loan from this innovative online lender. Add a 100% offset account for $10 a month.
3.49%
4.49%
$0
$395 p.a.
90%
Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.
3.89%
4.88%
$0
$395 p.a.
95%
Low deposit package loan with a range of discounts. Earn up to 500,000 Velocity Points to spend on flights, hotels and more.
3.73%
3.76%
$0
$0 p.a.
80%
This basic loan offers discounts for higher borrowing amounts and carries no ongoing fees.
3.69%
3.94%
$0
$248 p.a.
70%
Get a sharp rate and a 100% offset account. Borrowers must have a 30% deposit.
3.64%
3.67%
$0
$0 p.a.
80%
A mortgage with a competitive variable rate, limited fees and plenty of flexibility.
3.54%
3.58%
$0
$0 p.a.
80%
Eligible borrowers can get $900 cashback on this loan with a 100% offset account and a redraw facility.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.64%
3.69%
$600
$0 p.a.
80%
A competitive variable rate for borrowers with a 20% deposit or more. Guarantor option available.
3.65%
3.66%
$0
$0 p.a.
80%
This special rate mortgage has no ongoing fees and offers flexible repayments. Save $595 in establishment fees before 30 June.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Get a 100% offset account to save on interest charges, and pay no application fee.
3.99%
4.85%
$0
$395 p.a.
95%
Competitive fixed rate package loan. For a limited time you can earn Velocity Points to spend on hotels and flights.
3.69%
3.74%
$600
$0 p.a.
80%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.68%
4.00%
$0
$299 p.a.
80%
Get a 100% offset account and rate discounts for higher borrowing amounts.
3.79%
3.79%
$0
$0 p.a.
80%
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan.
3.74%
3.74%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.62%
3.62%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more. Terms and conditions apply.
3.64%
3.64%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at 70% or below with this innovative online lender.
3.64%
4.03%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.70%
4.13%
$0
$395 p.a.
90%
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.77%
3.81%
$200
$0 p.a.
95%
A simplified mortgage with a low interest rate and a redraw facility.
3.79%
3.83%
$600
$0 p.a.
80%
A low interest rate loan with limited fees and a redraw facility. Principal and interest repayments only.
3.68%
3.69%
$0
$0 p.a.
95%
This variable rate loan offers flexible repayments and a redraw facility. Available with a 5% deposit.
4.19%
3.78%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.73%
3.76%
$0
$0 p.a.
80%
This basic loan offers discounts for higher borrowing amounts and carries no ongoing fees.
4.09%
4.12%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.99%
3.74%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.79%
3.79%
$0
$0 p.a.
80%
Get a 100% offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.68%
4.00%
$0
$299 p.a.
80%
Get a 100% offset account and rate discounts for higher borrowing amounts.
3.79%
3.84%
$600
$0 p.a.
90%
Buy your home with just a 10% deposit, few fees and a reasonable interest rate.
3.89%
3.92%
$0
$0 p.a.
80%
A low-fee line of credit loan from an online lender. Unlock the equity in your home and make interest-only repayments with a competitive rate.
3.94%
3.71%
$0
$0 p.a.
80%
Apply online for this fixed rate, low-fee loan with redraw facilities and an optional offset account.
3.83%
4.49%
$0
$299 p.a.
95%
Owner-occupiers can enjoy a discounted fixed rate, a rate lock feature and the ability to make additional repayments.
3.69%
4.47%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
3.78%
3.78%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.62%
3.62%
$0
$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.85%
4.05%
$0
$350 p.a.
95%
This high LVR fixed rate loan allows you to borrow up to 95% of the value of the property you're buying.
4.09%
4.11%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Points on your mortgage (for a limited time, subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
4.09%
4.12%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and get flexible repayment options and a redraw facility.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.99%
4.03%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and pay no application or ongoing fees.
3.59%
4.42%
$600
$0 p.a.
95%
Get a 1% discount for the first two years of your loan and pay no application or ongoing fees.
3.68%
3.69%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.89%
4.97%
$0
$395 p.a.
95%
Get discounts on a range of Commonwealth Bank products and enjoy the option of fee-free extra repayments during the fixed term.
3.89%
4.96%
$0
$395 p.a.
95%
Switch to this loan and can get $1,500 cashback. Conditions apply. Package your home loan with a Qantas rewards earning Amplify credit card.

Compare up to 4 providers

Before switching loans or lenders

Before making a switch, review your existing loan for fees, charges and restrictions, because your loan may feature a range of conditions when switching loans. To establish if you need to switch just your loan or your lender as well, consider the following:

  • Have you spoken to your existing lender and told them your plan? Many times, your existing lender will counter-offer you a discounted interest rate or the ability to switch to a more suitable loan for you, saving your the hassle and money associated with going to a new lender.
  • Home loan features. Most home loans have various features attached to them and this is something that needs your consideration when looking for a new home loan. Some useful features include additional repayment options, offset accounts, redraws and repayment holidays.
  • Costs incurred when switching to a new lender. When changing lenders you may have to incur break costs or other fees and the loan's approval date has a bearing on this. This is because variable rate loans approved after July 1, 2011 are not subject to exit fees. If your loan approval took place prior to this date it is best to check with your lender to see what fees apply. Fixed rate loans, approval date notwithstanding, attract break costs during switches. Some lenders charge discharge fees to make necessary preparations for the transfer.
  • Costs incurred when switching between variable and fixed rate loans. Switching between these two types of loans impacts on the costs you have to bear. This is because switching from a fixed rate loan to a variable rate loan generally attracts break costs, due simply to your lender's estimated losses because of the switch. Switching from a variable rate loan to a fixed rate loan does not attract break costs, although you still need to find out about any exit fees or early payment charges.
  • Loan term and repayments. The loan term requires your attention for the simple reason that while longer loan terms can translate into lower monthly repayments, you may have to pay more in the form of interest. On the other hand, a reduced term results in higher repayments, which is why affordability comes into play.
  • What are packaged loans? Some lenders offer loans in the form of packages which, in addition to conventional home loans, can include elements like transaction accounts, credit cards, insurance covers and reduced overall fees.

Pros and cons of switching home loans

Switching a home loan comes with its share of pros and cons, so knowledge about both can help.

Pros

  • Reduced interest rate. In most cases, people looking at switching their home loans do so in search of lower interest rates and home loans with lower interest rates can help you save hundreds and even thousands of dollars.
  • Availability of funds. Switching your home loan can give you access to your home’s equity, allowing you to make further investments or large purchases.
  • Added features. If your home loan does not come with any added features, you can look for a new one that comes with redraw ability, multiple repayment ability, an offset account or even a credit card.

Cons

  • Penalties. When making a switch you have to know in advance just how much you have to pay in the form of penalties. This is because what you end up paying in the form of penalties can make a seemingly good deal turn bad in no time.
  • Fees. You will usually have to pay the upfront fees associated with your new home loan if you switch lenders. This includes the application fee, valuation fee, plus any ongoing fees.

Things to avoid when it comes to switching home loans

If you have to pay more than you would save when getting a new loan, then it may not make financial sense to not go forward with the switch. What you also have to bear in mind is that your new lender can raise interest rates in the future. After all, there are lenders that lure customers with low interest home loans at the start and then increase interest rates later, which is why you should stick to reputable lenders.

Since switching a home loan requires that you apply for a new home loan, you should ideally avoid making big purchases before you apply for the loan and you should not change your job in the period just before you apply. Not paying attention to the new loan’s rates and fees can lead to surprises later on.

Frequently asked questions about switching home loans

Adrian Barclay

Adrian spends most of his working hours writing about home loans and everything property, as well as interviewing finance experts.

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Important Information*
loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64%p.a.
comp rate of 3.66%p.a.

UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupied Variable P&I Rate — borrowing $700,000 or more

Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more. Terms and conditions apply.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.

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