As of July 2026, the Reserve Bank of Australia’s cash rate target is 4.35%, with inflation at 4.0% annually for May 2026. This means many Australian mortgage holders are still facing pressure from higher repayments and the rising cost of living. With increased expenses and household budgets under pressure, you might be looking for ways to save money while maintaining ownership of your home. Reserve Bank of Australia
You wouldn’t be alone. In the March quarter of 2026, 103,798 borrowers refinanced their home loans with another lender, made up of 66,617 owner-occupier external refinances and 37,181 investor external refinances. Australian Bureau of Statistics
Given that’s the case, refinancing continues to be an option many homeowners consider.
What is Refinancing?
Refinancing is the act of cancelling your current credit agreement in favour of another one. Refinancing means you will sign a new contract. The contract generally has more favourable interest rates, payment schedules and/or other terms and conditions. The most common times that people refinance are when interest rates rise or fall.
As a homeowner with a mortgage, chances are you’ve heard of the term ‘refinancing’. Refinancing involves reviewing your current mortgage, and potentially swapping your loan to another lender who can better meet your current needs, wants and circumstances. You can always contact us for more information at Nice Loans.
Refinancing can also allow you to consolidate your debts or pay down your mortgage more quickly.
When Would I Refinance My Mortgage?
Refinance – whenever it makes financial sense to do so.
Heard about mortgage refinancing? In the past, most people who took out a mortgage doggedly continued with it until they had paid it off. These days, people refinance their mortgages much more frequently. The average duration of a home loan in Australia now is just 4-5 years. Here, we look at some of the reasons people in Australia refinance their home loans.
However, refinancing is not suited to everyone. There are many different factors you will need to consider when thinking about refinancing a loan. Before you initiate an application to refinance, your broker will need to assess your needs and objectives as well as your current financial situation.
The first step is to speak to a professional, such as a mortgage broker, about your needs and whether you can afford a different loan structure or other change to your mortgage, particularly if you have more than one property.
Find out more about when to refinance a home loan.
Am I Eligible to Refinance?
Before you refinance, you need to meet the eligibility criteria, which typically include:
- Having at least 20% equity in your home or paying LMI (Lenders Mortgage Insurance)
- Showing proof of your income, assets and other liabilities.
- Current home loan documentation.
- A good credit score. You can get a free credit report at Equifax.
- A reliable home loan repayment history.
What are the Drawbacks of Refinancing?
Although there are many advantages to refinancing your home loan, it isn’t entirely without consequences. If you do refinance, then you may end up paying more interest over the lifetime of the loan. That could outweigh the interest savings.
If interest rates decrease and you have committed yourself to a fixed-rate home loan, you could find yourself paying high exit fees to take advantage of the lower rates.
Refinancing could reduce the equity you have in your home, which could mean that you now have to pay Lenders Mortgage Insurance or that your monthly repayments increase.
One of the risks of refinancing your home loan is that you may need to pay Lender’s Mortgage Insurance (LMI)* to your new lender. If switching your loan means you will need to pay LMI again, it may not be worth refinancing.
It is important to consider that when you take up a new home loan, it can incur exit fees and may not have all the features your existing home loan has.
Before you look at refinancing, it is worth chatting to a mortgage broker to see if refinancing is right for you. We are independent mortgage brokers with access to home loans that you may not otherwise find. Our process is very simple and takes only 20 minutes to fill out the application. We also have a useful calculator so you can work out what’s right for you and what your anticipated monthly repayments would be.
Talk about mortgage refinancing with an MFAA-approved finance broker like us at Nice Loans – Mortgage Broker. We are not just your average mortgage broker.
*LMI protects the lender against potential loss.
You can also find us on Facebook.
