What is refinancing a home loan? And when does it make sense?

Refinancing means replacing your existing home loan with a new one — usually from a different lender. Here is when it makes sense and what it involves.

By Jason Given · April 2026 · 5 min read

Refinancing in plain English

Refinancing means replacing your existing home loan with a new one. This usually involves moving to a different lender who offers a lower rate, better features or a structure that better suits your current situation. Your new lender pays out your old loan and you begin making repayments on the new one.

The most common reason to refinance is to get a lower interest rate — which reduces your repayments and total interest paid over the life of the loan. But refinancing can also be used to access equity, restructure your loan, consolidate debts, or switch between fixed and variable rates.

The five main reasons Australians refinance

Lower rate

The most common driver. Moving to a more competitive lender can save thousands per year. Even 0.5% on $500k saves $2,500 annually.

Access equity

Refinancing can release equity built up through repayments or property value growth for renovations, investment deposits or other purposes.

Debt consolidation

Rolling high-interest personal loans and credit cards into the home loan at a lower rate simplifies repayments and reduces interest.

Better features

Switching to a lender with a better offset account, more flexible extra repayments, or lower ongoing fees can improve your loan structure.

Rate change

Switching between fixed and variable as your circumstances or market outlook changes.

How the refinancing process works

The refinancing process runs in parallel with your normal loan repayments — there is no period where you have no loan or two loans active simultaneously. Lendology manages the entire process: assessing your current loan, comparing alternatives, submitting the application, and coordinating the discharge of the old loan and settlement of the new one.

✓Lendology reviews your current loan and compares it against the market
✓We identify lenders offering better rates or features for your profile
✓Your application is submitted with the new lender
✓The lender values your property and assesses the application
✓On settlement day, the new lender pays out your old loan and your new loan begins
✓Total process typically takes 4 to 8 weeks

Most lenders offer cashback deals of $2,000 to $4,000 for new refinancers. Lendology factors these into the true net saving calculation — because a slightly higher rate with a $3,000 cashback can outperform a lower rate with no cashback, depending on your loan size and timeline.

Frequently asked questions

How often should I refinance?

There is no set rule, but reviewing your rate every 18 months is good practice. Lendology contacts clients proactively when the market moves in a way that creates a refinancing opportunity.

What does refinancing cost?

Typical costs include a discharge fee from your current lender ($150 to $400), loan establishment fees with the new lender ($0 to $600), and potentially a government mortgage registration fee. Many lenders offer cashback that offsets these costs entirely.

Will refinancing affect my credit score?

Applying for a new loan creates a credit enquiry that temporarily reduces your score by a small amount. The effect is minor and short-lived. Lendology minimises unnecessary enquiries by identifying the right lender before lodging any application.

Can I refinance if I have little equity?

It depends on your LVR. Most lenders require an LVR of 80% or below to refinance without paying LMI. If your property has increased in value or you have made significant repayments, your LVR may be lower than you think. Lendology calculates your current LVR before recommending refinancing.