With the cash rate on hold, many borrowers are taking a closer look at their home loans. If you have not reviewed yours in a while, it is worth understanding whether your current loan still suits your situation. Even a small reduction in your rate can make a meaningful difference to your monthly repayments, especially with cost of living still squeezing household budgets.
Refinancing is not the right answer for everyone. But the question is always worth asking, and the cost of asking is small. The five filters below are the ones that tend to settle it either way: rate gap, switching fees, equity position, loan term, structure.
Below is what to weigh up before deciding to switch.
Switching Can Make A Meaningful Difference
Interest rates vary significantly between lenders. According to MoneySmart.gov.au, there can be a difference of more than 2% between variable home loan rates currently on the market. Depending on your loan size, even part of that gap translates to a meaningful change in what you pay over the life of the loan.
If you have been with the same lender for some time, you may also be paying what is sometimes called "loyalty tax". Lenders often reserve their sharpest pricing and feature sets for new customers rather than existing ones, which is why a periodic review matters. The first half of what happens when you refinance your home loan walks through the mechanics if you have not refinanced before.
Factor In Every Fee And Charge
Before refinancing, it is important to understand the fees and charges that may apply. The most common:
- Break fees, if you are on a fixed-rate loan
- Discharge fees, charged by your current lender to close the loan
- Application fees, charged by the new lender to set up the new loan
- Switching fees, if you stay with the same lender but change loan products
- Stamp duty, depending on your state or territory and the nature of the change
Weighing these costs against any change in your repayments is the core of the refinance maths. It is the bit that comparison sites tend to gloss over.
Be Aware Of Lenders' Mortgage Insurance
Before refinancing, it is worth having a clear picture of your home's current market value and the equity you hold. This matters more in 2026 than it did three years ago - property values have fluctuated across many markets, and not always in the direction you would expect.
If you hold less than 20% equity in your property, refinancing may trigger a fresh requirement to pay Lenders' Mortgage Insurance (LMI). LMI is generally not transferable between lenders, meaning even if you paid it on your original loan, you may need to pay it again on a new one. That is a real cost to factor in to the decision.
Watch The Loan Term
When refinancing, pay attention to the loan term. Resetting to a fresh 30-year term generally means paying more interest over the life of the loan, even if the rate itself is lower. Depending on your circumstances, it is worth considering a loan term that aligns closely with what remains on your current loan, so you do not give back the rate saving on the back end through extra years of interest.
Be Intentional With Interest-Saving Features
When rates are higher, a financial buffer is worth more than it normally would be. Features like an offset account or redraw facility let you keep extra funds working against your loan balance, which reduces the interest you are charged while still giving you access to those funds if you need them.
Whether you should prioritise offset or redraw, and how the two compare on cost and flexibility, is covered in detail in offset or redraw: things to consider as rates rise. It is worth a read before you finalise the structure on a new loan.
Get A Professional On Your Team
Comparison websites can be a useful starting point, but they do not show the full picture. Some feature sponsored listings or a narrow panel of lenders, and few capture the real serviceability and product detail that decides whether you are actually approved.
A mortgage broker takes the time to understand your individual circumstances, then compares options across a wide range of lenders. When reviewing your options, there are three things especially worth being aware of:
- Switching costs versus rate risk - understand the upfront costs alongside the potential impact of further rate movements
- Serviceability - lenders assess whether you can meet repayments under their lending criteria, and that bar has moved up
- Rate lock - if you are considering a fixed-rate loan, a rate lock option may let you secure a quoted rate while your application is processed
For the wider 2026 rate picture and how to think about timing, the June 2026 Newsletter covers the current setting and the RBA's posture.
The Question Worth Answering
Refinancing is not always the right move, but knowing whether it is the right move for you is. A home loan health check covers the five filters above against your actual loan and gives you a clear answer in one sitting.
