How to Switch Home Loans and Lenders

Rates and fees last updated on

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 December 17th, 2017
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Loan purpose
Offset account
Loan type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.62%
3.62%
$0
$0 p.a.
80%
A discounted, competitive variable rate loan with limited fees.
3.64%
3.67%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.88%
4.89%
$0
$395 p.a.
95%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.64%
3.67%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.64%
3.64%
$0
$0 p.a.
70%
A low-rate basic home loan requiring a 30% deposit.
3.69%
4.01%
$0
$299 p.a.
95%
A loan with no application fee and borrow up to 95% LVR.
3.69%
3.69%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application fee or ongoing fees with this loan.
3.64%
4.03%
$0
$395 p.a.
80%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.99%
4.91%
$300
$10 monthly ($120 p.a.)
80%
Special offer for new lending between $150k-$500k & under 80% LVR.
4.09%
4.11%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.68%
3.69%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.95%
4.99%
$300
$10 p.a.
95%
A flexible, competitive fixed rate loan that allows for extra repayments.
3.78%
3.78%
$0
$0 p.a.
80%
A basic low-rate home loan that still offers some useful features.
3.65%
4.84%
$0
$395 p.a.
90%
A 2 years fixed platinum package that has $0 application and a loan redraw facility.
3.72%
3.74%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.73%
3.73%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.79%
4.11%
$0
$299 p.a.
80%
A fully featured home loan with an offset account and discounts available.
3.99%
4.02%
$600
$0 p.a.
90%
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
3.65%
4.19%
$500
$0 p.a.
95%
Get a discounted fixed interest rate for the first 12 months while you settle into your new loan.
3.74%
4.15%
$0
$395 p.a.
80%
Enjoy a discount of a competitive interest rate and 100% offset account.
3.87%
3.92%
$0
$0 p.a.
90%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.96%
3.98%
$0
$0 p.a.
90%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.97%
3.97%
$0
$0 p.a.
90%
A competitive variable rate home loan with no ongoing fees.
3.84%
4.83%
$0
$0 p.a.
95%
Get a competitive 2-year fixed rate with no application or ongoing fees.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
4.04%
4.07%
$0
$0 p.a.
80%
Access the equity in your home with a competitive interest-only rate and no application fee.
3.99%
3.99%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
3.74%
3.74%
$0
$0 p.a.
95%
A low rate home loan with no application or ongoing fees. Loan comes with 1 year of free home and contents insurance. Note that to be eligible for this loan you must be QLD resident.
3.89%
3.91%
$0
$0 p.a.
80%
Package your owner-occupied loan with your investment loan and enjoy low rates for both.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
4.19%
4.19%
$0
$0 p.a.
90%
100% offset account, unrestricted additional repayments and no monthly account keeping fees
3.99%
4.77%
$0
$0 p.a.
95%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.94%
4.88%
$0
$0 p.a.
90%
Enjoy a low interest rate and borrow up to 90% (with LMI) of your property's value.
3.69%
3.69%
$0
$0 p.a.
70%
Enjoy a low variable rate with no application and ongoing fees.
3.99%
4.03%
$0
$0 p.a.
95%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.59%
4.42%
$0
$0 p.a.
95%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$600
$0 p.a.
90%
Get a low variable rate along with some important basic features.
3.79%
3.79%
$0
$0 p.a.
80%
Minimum loan amount for this basic home loan is $750001.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.69%
4.03%
$0
$299 p.a.
80%
Enjoy a low variable rate with no application fee.
3.99%
4.99%
$0
$395 p.a.
95%
A package home loan with fee free extra repayments available during the fixed term.
3.85%
4.95%
$0
$395 p.a.
95%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.88%
4.88%
$0
$395 p.a.
95%
Lock in a discounted fixed rate with a low service fee.
$0
$0 p.a.
A basic low-rate home loan that still offers some useful features.

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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