Refinancing Your
Home Loan

When was the last time you reviewed your home loan? Refinancing or changing loans is often done to get a cheaper interest rate or a wider range of features. It could equate to significant savings and also allow you to pay off your home loan quicker. Best of all it is easier than you think.

Why refinance?

There are lots of reasons. Here are just a few.

  • Get a cheaper interest rate. Savings can be a big motivator. See what a difference it could make here.

  • Change the type of loan like a sharp fixed rate, a variable interest rate, an interest only loan or a line of credit.

  • Get more loan features like an offset account, ability to pay extra, fee free ways to access your redraw.

  • Consolidate debt and pay out smaller debts with higher interest rates like credit cards and personal loans.

  • Access equity for other things you want to do like renovations, go on a holiday or buying a car.

  • Invest elsewhere. Use your equity to invest in property, shares or managed funds.

Refinancing costs and savings

If you are thinking of refinancing you need to work out if the interest savings over a few years outweigh the costs.

  • Fees to close your existing loan

  • Setup costs for the new loan

  • Government registration fees

  • Lenders Mortgage insurance

Mortgage insurance is a major reason why people don't refinance. If your loan is still above 80% of the value of the property, it will be levied again as it is lender specific.  

If the costs are too high in comparison to the savings, it may make more sense to stay with your current lender. Click here to find out more about refinancing fees.

How much could you save by reducing your interest rate?
  • $
  • %
  • 1598.15

Estimated figure is based on a 1 year interest only loan with no principal payments, is provided for illustrative purposes only.
Interest savings may be impacted by other factors not considered in this calculation, please seek advice or refer to the terms and conditions of your credit product.

Understanding property value and refinancing

What your home is currently worth is a critical element in refinancing.

It will determine:

  • If you are able to refinance. If the value of your property has decreased then what you owe could be more than the value of the property

  • If mortgage insurance will apply. If you still owe more than 80% of the value

  • How much equity you have. If you are wanting to increase your loan to borrow more for other purposes

Researching what similar properties have sold for in your area can help you estimate your property’s current value.

Look for similar:

  • Land size

  • Number of bedrooms

  • Type of construction

There are also reports available online that will also help you determine your property's current value.

Types of loans

Consider different types of loans to help you find one that suits you.

  • Variable loans give you greater flexibility to make extra repayments and redraw but the rate can vary and so will your repayments.

  • Fixed rates offer certainty so you know what your repayments will be but can be inflexible if you change your mind or want to pay extra.

  • A line of credit is a good option if you are renovating or investing and only want to borrow what you need.

  • Principal and interest repayments will be higher but will mean you are paying off what you owe.

  • Interest only repayments are lower but you won't be paying anything off what you owe.

Find out more about the pro's and con's of different home loan types.

Choosing a new loan

Comparing interest rates between different lenders is just the start.

Check out things like:

  • Different types of loans

  • Setup and ongoing fees

  • Range of loan features and any restrictions

  • Lenders customer service record

  • External recognition like awards

Decide on the type of home loan and compare them. Use your own loan amount and loan term when doing comparison calculations and make enquiries with the lender to ensure that you qualify. 

Read more information about how to compare home loans here.

Steps to refinancing

  1. Step 1. Research home loan options and compare rates and features

  2. Step 2. Apply for a new home loan and provide documents like payslips

  3. Step 3. Assessment of your application by the lender and a valuation ordered

  4. Step 4. Approval if it fits the lenders criteria and new loan contracts issued

  1. Step 5. Return signed contract which is then checked by the lender

  2. Step 6. New lender contacts the current lender to agree on a transfer date

  3. Step 7. Settlement is when the transfer is complete and your new loan starts

What lenders look for

  • Adequate cash flow

    To ensure that the loan is suitable, lenders do a calculation to determine if you can afford the loan. Be prepared to answer questions about how much it costs you to live as well as your income and current commitments.

  • Appropriate assets and liabilities

    Lenders like to see what you own being more than what you owe and net assets at a level you would expect when compared to your age and income. Paying down personal debt and building net worth should be a priority.

  • Adequate equity

    In order to refinance you will need to have equity. Refinancing often doesn't make financial sense if you owe more than 80% of the property value due to mortgage insurance. Rising property values, paying down your home loan and improvements to the property can all help increase your equity.

  • A good history of making repayments on time

    By asking you to provide statements on all debts being refinanced, lenders are looking to see if you make your repayments on time and in full. A credit check is also done to see if you have any defaults or hiccups in your credit history.

Quick tips for refinancing

  • Do not send in multiple applications

    Each time you apply it will be recorded on your credit report as an enquiry. If you have multiple enquiries it will impact your credit score. Only submit an application if you intend to go with that lender and you know that your scenario fits their criteria regarding serviceability, property location etc.

  • Be realistic about your property's value

    Do your research so you know what your property is worth. Having a realistic figure can help when you do calculations to ensure it is worthwhile refinancing.

  • Put off applying for more credit

    The available credit limit on your cards will impact your affordability. Don’t apply for more credit and take a good look at the limit of your credit facilities like personal loans and credit cards. Reduce them if you don’t actually need the full limit.

  • Don’t change jobs

    Employment stability is important when assessing your income. You may be required to have started your new job or have been in it for a while or even past probation before the lender will be comfortable using your income.

  • Get your paperwork ready

    You can reduce the waiting time and speed up the process by having your documents ready. Start saving your payslips, payment summaries and mortgage statements.

How we can help

Our Lending Specialists are ready to assist you. They can help you navigate the loans you can choose from, calculate the benefit, help you understand the features and access reports to help you understand what your property is worth. They can also assist with making the application process straightforward and will keep you updated so you know what is happening.

Refinancing Home Loan Options


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So glad we left the big banks

Right from the word go, it's just been a pleasure dealing with State Custodians. We dealt with real people who listened to us. And the real proof has been in the ongoing service over the last 12 months. Their interest rates are great. The product is great. And the service is amazing. I have recommended them to friends and will continue to do so.

Sydney, NSW

Excellent customer service

Refinancing from one of the big banks, State Custodians not only had a better product, but a better rate and staff to guide me with every step. Nothing was ever too much trouble, everything was explained from the initial contact to settlement.

Springwood, NSW

They leave the banks for dead!

We have been customers of State Custodians for a few years now. Overall, we can't speak highly enough of their customer service and product. All of our transactions have always proceeded smoothly and it's never too much trouble to gain clarification about anything you need to know. Give them a go, they leave the banks for dead!!

Murrumbeena, VIC


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