How rising rates are driving more Australians to review their home loan

The Reserve Bank of Australia has increased the cash rate three times this year, bringing it to 4.35 per cent. The highest level since November 2023.

While the cash rate has remained unchanged in recent months, uncertainty around the interest rate outlook remains, with some economists forecasting the possibility of further increases before the end of the year.

For many home owners, the higher rate environment has translated into increased mortgage repayments and therefore greater pressure on household budgets. With many borrowers now paying significantly more than they were when they originally took out their loan. As a result, refinancing has become a key consideration for many Australians.

What is refinancing?

Refinancing your home loan means replacing your current mortgage with a new one, either with a different lender or by switching to a new loan product with your existing lender.

What can it achieve?

• Secure a more competitive interest rate;
• Potentially lower your mortgage repayments;
• Adjust your loan structure (eg switch from variable to fixed);
• Access available equity in your property (eg for renovations or major expenses);
• Take advantage of interest-saving features such as offset accounts or redraw facilities.

What’s the process of refinancing?

Refinancing follows a similar process to applying for a new home loan, but it can be much more straightforward when you understand the steps involved. Here’s what you can generally expect:

1. Understand why you’re refinancing – Being clear on why you want to refinance and what you hope to achieve should be the first question you ask yourself. Knowing the answer to this will help your broker recommend the best solution tailored to your current situation. 
2. Comparing home loans – Your broker will compare a range of lenders on your behalf to help identify loan options that may suit your needs and circumstances.
3. Apply for a new home loan – Similar to your original home loan application, you’ll need to provide supporting documents like proof of identity, income details, employment information, and a summary of your assets and debts. Upon receipt of this, your application will be prepared and submitted.
4. Loan approval – If your loan is approved, your new lender will send you a new contract and mortgage documentation for signing.
5. Settlement – Congratulations, you’ve now refinanced your home loan! Your new lender will arrange to pay out your existing loan with your initial lender. You will officially start making repayments to your new lender.

Is now the right time to refinance?

Whether now is the right time to refinance largely depends on your individual circumstances and financial goals. It may be worthwhile reviewing your current home loan to see if refinancing could put you in a better position.

Some lenders are also offering incentives, such as cashback deals to attract new customers, which may be appealing depending on your situation.

We break down some of the most competitive rates and cashback offers each week on our website. You can explore the latest deals here:

Why refinance with a mortgage broker? 

Mortgage brokers can offer you more options than a bank, which allows you to snap up the best deal possible. 

If you’d like to understand whether refinancing is the right move for you, get in touch with QLS member benefits partner, Legal Home Loans. You may also be eligible for a $500 benefit upon loan settlement through the LHL member offer.*

Contact: (02) 9040 0420 or enquiries@legalhomeloans.com.au

*Rebate applies to the member’s first loan settled with Legal Home Loans. Legal Home Loans will honour the highest valued rebate that applies to the member. Limit of one rebate per loan in the case of multiple qualifying applicants. The loan value must exceed $250,000 to be eligible.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Accounting Home Loans ABN 77 672 265 735. Credit Representative Number 557666 is authorised under Australian Credit License Number 389328.