What does refinancing mean?

Approaching the end of your fixed-rate term or looking for a better deal on your interest rate? Understand how the refinancing process for a home loan works.

Whether you’re approaching the end of your fixed-rate term or you’re keen to find a better deal when it comes to your interest rate, it can help to understand how the refinancing process works.  

What is refinancing?

Refinancing is the process of taking out a new home loan to replace your existing home loan - this could be with your current lender, or with a completely different lender.  

When should you consider refinancing?

The best time to refinance really depends on your individual situation – these may include:

  • You’re on the hunt for a more competitive interest rate,  
  • You’re looking to access the equity in your home,
  • You want to reduce the loan term or  
  • Your fixed rate is coming to an end
  • You want to consolidate your debt
  • You want to access better features with a different lender or home loan

How much can I save if I refinance?

A mortgage calculator can help you calculate your potential savings and give you an idea of what your new repayments could look like. Keep in mind:

  • If your loan-to-value ratio (LVR) is less than 80% you may need Lenders Mortgage Insurance
  • You might also have to pay discharge fees to exit your existing loan

It’s important to run the numbers to make sure that it makes sense to switch.

What are the benefits of refinancing?

There are a number of potential benefits when refinancing your home loan including:

  • Securing a lower interest rate
  • Reducing bank fees
  • Consolidating debt
  • Tapping into equity
  • Accessing new features
  • Reducing your loan term

Learn more about the benefits of refinancing your home loan here.

What factors should I consider before refinancing?

Before you pull the trigger, there are a few key points to consider:

  • Check your comparison rate
  • Discharge fees with your existing lender
  • Home loan features with your potential new lender
  • Check your LVR

Learn more about how these factors here.

Want to know more about refinancing and how it works? See our six step guide here.

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval; satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000.

^ Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. This discount is applied to each loan that you have with Unloan. If you have multiple loans (e.g. one investor and one live-in loan), they will each have a discount calculated based on when you settled each loan. Unloan may withdraw this discount at any time.

There are no fees from Unloan. However, there are some mandatory Government costs depending on your state when switching your home loan. For convenience, Unloan adds this amount to the loan balance on settlement.

* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.

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Calculations are not a loan approval. Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions will be set out in our loan offer, if an offer is made.

^Rates shown are inclusive of a 0.01% p.a. discount off our reference rate. On each anniversary of your loan’s settlement date, you will receive an additional discount of 0.01% per annum, up to a maximum discount of 0.30% per annum. For purchase loans with a Loan to Value Ratio (LVR) between 80.01% - 90% LVR, a lenders mortgage insurance (LMI) premium and higher interest rate apply. In some cases depending on the property’s location or type, LMI may also be required for LVR between 70.01% and 80%.

*Comparison rate is calculated on a $150,000 secured loan over a 25 year term. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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