Home Loan Refinancing Guide


If you have not reviewed your mortgage in a number of years, perhaps it is time to dust off the calculator and do the sums. Home loan refinancing can be a prudent decision as it could save you money on one of your largest annual expenses. After all, interest rates do change over time – which accounts for the fact that, on average, people in Australia change their home loan every 5 years.

However, to ascertain whether refinancing is a viable option for you, you have to weigh up the pros and cons. If you are relatively inexperienced when it comes to economic matters, read on, because this guide will take you through the basics of home loan refinancing.

Refinancing Home Loan

What does it mean?

You may have heard the term thrown about by some of your more money-savvy friends and thought ‘what exactly does it mean?’ Simply put, refinancing is obtaining a new mortgage for your home in replace of your existing one.

Why do it?

The main reasons people choose to refinance their home loans are:

  • To access lower interest rates;
  • To reduce their monthly loan repayments;
  • To take out cash from their home to make large purchases; or,
  • To change lenders.

It is currently a great market for home loan refinancing as interest rates are at an all-time low. This has to lead to increased competition between lenders, giving consumers better deals and more flexibility.

How much will it cost?

To determine if a new home loan is better than the one you currently have, you need to know:

  1. The total loan term;
  2. The total cost of loan; and,
  3. The interest rate.

When you measure these points up against the loan you currently have, it should become clearer if it is going to be a good idea to switch over. Ideally, your new deal should have a lower total cost of interest. However, some people wish to refinance because their finances have changed and wish to reduce the total loan term by increasing the repayments (this will also save you money on interest). The easiest way to work this out is with a home loan calculator.

What to consider?

  1. 1.       Your Credit Score

A credit score is a figure that helps determine how much of a risk you are to lend to. Before you start shopping around, it could be a good idea to find out what your credit score is if you don’t already have this information. If you have bad credit, it may be more difficult to refinance at a low interest rate.

Bear in mind that if you have been paying off your loan (on time) for a number of years, lenders may consider you to be a less risky borrower, which may lead them to offer you a better deal.

  1. 2.       Using a Finance Broker

Using a mortgage broker can be a great idea. Mortgage brokers are professionals who are able to help find you the most suitable financial solution from hundreds of mortgage options through a large network of lenders. At the end of the day a broker will help guide you through the finance process, whilst saving you time, effort and stress.

  1. 3.       Costs

When deciding whether refinancing your loan is worth it, you should consider any additional costs that may be incurred, such as:

  • Mortgage discharge fees;
  • Loan application fees; and,
  • Settlement fees.

Is it worth it?

Even if you end up staying with your current financial solution, periodically reviewing your home loan is still worth it because of the potential to save money. Regularly reviewing your finances will ensure that you continue to use the most suitable solutions available to meet your needs.


If you have a home loan and have never considered refinancing, now is the time to review your finances as many of the home loan products on today’s market are better than they have ever been. 

Are you ready to talk about refinancing your home loan? Contact Iconic Home Loans to talk to one of our accredited finance brokers. 

**The information provided here is general advice only and your personal circumstances have not been taken in to consideration during its preparation. You should seek independent advice before making any decisions relating to your personal finances. Finance availability is subject to applicant meeting lenders qualifying criteria, and all finance approvals are at the discretion of the lender.