How to refinance your home loan: the full process, step by step

Refinancing means replacing your current home loan with a new one — either with a different lender or a restructured loan with your existing one. Done well, it can lower your repayments, shorten your loan term, or unlock features like an offset account. Done carelessly, the fees and a reset loan term can eat the benefit. Here is the full process from first look to settlement, including what it actually costs.

Step 1: Audit your current loan

Before you look at anyone else's loan, get clear on your own. Pull your most recent statement or log into your banking app and write down:

• Your current interest rate, and whether it is fixed or variable
• Your remaining loan balance and remaining term
• Your repayment amount and frequency
• Any ongoing fees (annual package fees, monthly service fees)
• Features you use — offset, redraw, extra repayments — and features you pay for but never touch
• Whether you are inside a fixed-rate period (this matters for break costs)

Many borrowers discover at this stage that they do not actually know their own rate. That is normal — lenders rarely volunteer it — but it is the single most important number in this whole exercise.

Step 2: Check your equity and LVR

Your loan-to-valuation ratio (LVR) is your loan balance divided by your property's current value. It drives almost everything about your refinance: the rates you qualify for, whether lenders will take you at all, and whether lenders mortgage insurance (LMI) applies.

If your LVR is at or below 80 per cent, you are in the strongest position — most lenders compete hardest for these loans and no LMI applies. If it is above 80 per cent, refinancing may trigger a new LMI premium with the new lender, even if you paid LMI on your original loan, because LMI does not transfer between lenders. In that case it often pays to wait until repayments and property value movement bring you under the threshold. Our [LVR and LMI calculator](/calculators/lvr-lmi) can help you estimate where you stand.

Step 3: Compare your options properly

With your current loan and LVR in hand, you can compare like with like. Look beyond the headline rate:

• Comparison rate — includes most fees and gives a truer picture over the loan term
• Fees — application, valuation, settlement and ongoing annual fees
• Features — offset accounts, redraw, repayment flexibility, splitting fixed and variable
• Loan term — refinancing to a fresh 30-year term lowers repayments but can increase total interest paid; matching your remaining term keeps you on track

Use a [repayment calculator](/calculators/repayment) to model the new loan over your remaining term, not a fresh 30 years, so the comparison is honest. A broker will typically run this comparison across dozens of lenders and, under the Best Interests Duty, must recommend what suits your circumstances rather than what pays best. You can read more about the options on our [refinance page](/loans/refinance).

This is also the moment to ask your current lender for a better deal. A simple repricing request — telling them you are reviewing your loan and asking for their best rate — sometimes closes the gap without any paperwork at all.

Step 4: Apply with the new lender

A refinance application looks a lot like your original home loan application. Expect to provide:

• Identification documents
• Payslips and tax assessments (or business financials if self-employed)
• Recent statements for your existing home loan and other debts
• Details of living expenses, assets and liabilities

The new lender will assess your income and expenses under NCCP responsible-lending obligations, order a valuation of your property, and check your credit file. They will typically assess your ability to repay at a buffer of around 3 percentage points above the actual rate, so approval is not automatic even if you have never missed a repayment. If approved, you will receive a formal loan offer and new loan contract to sign.

Step 5: Discharge and settlement

Once you sign the new contract, two things happen in parallel:

• You complete a discharge authority form with your current lender, instructing them to release the mortgage. Lenders can take a couple of weeks to process this, and some will call to try to keep your business.
• The new lender and outgoing lender book settlement, usually conducted electronically through PEXA in most states. At settlement, the new lender pays out your old loan, the old mortgage is discharged from the title, and the new mortgage is registered.

After settlement, confirm your old loan shows a zero balance and is closed, check that any linked offset or credit accounts you no longer need are shut, and set up your new repayments and direct debits. End to end, a straightforward refinance commonly takes two to six weeks depending on lender turnaround times.

What refinancing actually costs

Refinancing is rarely free, but the costs are usually modest and knowable in advance:

• Discharge fee — charged by your outgoing lender for closing the loan, commonly a few hundred dollars
• Government fees — mortgage discharge and registration fees charged by your state's land titles office, typically a few hundred dollars combined
• New lender fees — application, valuation or settlement fees; many lenders waive some or all of these for refinancers
• Break costs — if you exit a fixed rate early, the lender can pass on its cost of unwinding the fixed funding. This can range from trivial to many thousands of dollars depending on your balance, remaining fixed term and how rates have moved since you fixed. Always request a payout figure including break costs before committing
• LMI — only if your LVR is above 80 per cent with the new lender

Weigh these one-off costs against the ongoing saving. If the total cost is recovered within the first year or two of savings, the numbers usually stack up — but run them for your own situation rather than relying on rules of thumb.

When the process is worth it

Refinancing rewards borrowers who do the audit honestly. If your rate has drifted well above what new customers are offered, your LVR is under 80 per cent, and you plan to keep the property for a few years, the process above typically pays for itself. If you are near the end of your loan, deep inside a fixed term, or above 80 per cent LVR, the maths deserves more scrutiny — our guide on [when to refinance](/articles/refinance/when-to-refinance) works through those signals in detail.

Talk it through with a broker

A broker can run the loan audit, comparison and application for you at no cost to you in most cases, and must act in your best interests when recommending a loan. If you would like a second set of eyes on your current loan, [get in touch](/contact) — a short conversation is usually enough to tell whether refinancing is worth pursuing.