Refinance Home Loan: Requirements and Timing

To refinance a home loan, reassess the borrower, check what the current loan costs to leave and apply for a replacement only when the benefit outweighs the total switching cost. Refinancing replaces the existing loan with a new loan secured by the same property, either with a new lender or through a new deal with the current one.

A common refinancing mortgage trap is a lower repayment that comes from a longer loan term instead of a cheaper loan. Compare the remaining term as well as the rate before you call a refinance a saving.

This guide follows the refinance sequence from reassessment through discharge and settlement. It also covers the evidence a new lender asks for and how long approval and settlement each take. Clients might call the same process a mortgage refinance, a remortgage or switching home loans.

Decide Whether to Refinance a Home Loan

Recommend a home loan refinance when the new loan meets the client’s objective at a lower total cost, or with a needed feature, after all switching costs. Start with that objective, because it decides which comparison matters.

A refinance can change the lender, the loan balance, the remaining term and the security. When the client moves lender, the outgoing lender’s mortgage is discharged at settlement and the new lender registers its own mortgage over the property. If the client borrows more than the payout figure, the balance rises and the extra funds need a recorded purpose.

Why Clients Refinance

Clients refinance for a lower cost, better features, debt consolidation or released equity. Each reason needs its own evidence in the file, so record the reason before you compare loans.

Reason to refinance	What the file must show
Lower interest cost	The current and proposed rates, fees and remaining terms, plus the total switching cost
Better features, such as an offset account	Why the client needs the feature and what it saves after its fees
Consolidating debts	A payout statement for each debt being repaid
Releasing equity	The amount, the declared purpose and how the funds will be paid out

Debt consolidation and equity release add their own checks. Use the guide to debt consolidation with a home loan for payout evidence and cost effects. Use the cash out refinance guide for declared-purpose checks and disbursement evidence.

Should I Refinance My Home Loan?

It depends on whether the saving, or the need the new loan meets, outweighs the total switching cost within the time the client expects to keep the loan. ASIC’s Regulatory Guide 273 on the best interests duty, published June 2020, says refinancing expenses can exceed the savings of a new loan. In that case, recommending the new loan may not be in the client’s best interests.

RG 273 adds that a client can benefit from knowing about a minor saving, with an explanation of when it would exceed the refinancing expenses. Record that break-even point in the file, alongside the client’s objective. The guide to the best interests duty covers the wider obligation.

Count the Total Switching Cost

Count every cost of leaving the current loan and starting the new one. Moneysmart’s guide to switching home loans, updated 29 July 2026, lists these costs.

• A discharge fee for closing the current loan.
• An application fee for the new loan, or a switching fee when the client stays with the current lender.
• Break costs for leaving a fixed rate loan early.
• Stamp duty, which can apply when refinancing.
• Lenders mortgage insurance (LMI) when the client has less than 20% equity.

As at October 2026, Westpac’s refinancing page adds the state government mortgage registration fee and a property valuation fee to the external costs. A new lender’s refinance incentive can reduce the net cost. Count it only once its conditions fit the client, using the guide to refinance cashback.

Compare the Remaining Term

Compare repayments over the same remaining term, because a reset term lowers the repayment without making the loan cheaper. Moneysmart’s switching guide tells borrowers to negotiate a loan with a similar length to their current one.

This hypothetical example uses assumed rates, not a lender quote. The client owes $500,000 with 24 years left at 6.20% and pays about $3,341 a month. A replacement loan at 5.80% over the same 24 years costs about $3,220 a month, a saving of about $121.

If switching costs total $1,800, the client recovers them in about 15 months. Over the full 24 years, the lower rate saves about $34,800 in repayments.

Now reset the same loan to 30 years at 5.80%. The repayment falls to about $2,934, which looks like a saving of $407 a month. Total repayments rise to about $1,056,000, about $94,000 more than staying on the current loan for its remaining 24 years.

This is how refinancing can increase the total a client pays while lowering each mortgage payment. A refinance to a 30 year mortgage can still suit a client whose objective is a lower repayment. Record that objective and show the client the extra total cost.

Refinance Options to Compare

Compare three refinance options before you assemble an application.

1. Reprice with the current lender. Ask the current lender for a lower rate on the same loan.
2. Move to a new lender. Replace the loan with another lender’s product, which needs a full application, a valuation and a discharge.
3. Restructure the loan. Change the structure, such as splitting it or adding an offset account, with either lender.

A borrower can refinance whenever a new lender approves the application. How often to refinance is a cost question. Each move restarts the fees, and a fixed rate loan can carry a break cost.

Reassess the Borrower

Reassess the borrower as if the file were new, because the new lender assesses current income, debts and objectives. The original loan approval tells the new lender nothing about the client’s position today.

Under RG 273, a broker can’t rely solely on earlier inquiries when a client returns after a delay. The guide notes that responsible lending obligations require inquiries within 90 days of credit assistance. Work through these checks in order.

1. Objective. Confirm what the client wants from the refinance, such as a lower repayment, a shorter term or a feature, and when they expect to sell or change the loan again.
2. Income. Verify current income with recent payslips or the evidence the new lender accepts for the client’s income type. Income that has changed since the original loan needs fresh evidence.
3. Expenses. Collect current living expenses and compare them with bank statements. The new lender tests them against its own benchmark.
4. Liabilities. List every debt, including credit card limits, car loans, buy now pay later accounts and personal guarantees. Match each one to a statement.
5. Equity. Estimate the property’s current value and calculate the loan-to-value ratio (LVR). The new lender’s valuation sets the final figure.
6. Credit conduct. Check the credit report and the current loan statements for missed repayments, defaults or a hardship arrangement.
7. Benefit of changing loans. Restate the saving or feature gained against the total switching cost and the remaining term.

Banks and other lenders regulated by the Australian Prudential Regulation Authority (APRA) also assess repayments at a buffered rate above the loan rate. In its 27 November 2025 release, APRA kept the mortgage serviceability buffer at 3 percentage points. A client who comfortably meets current repayments can still fall short at the buffered rate, so run the loan serviceability calculation before you promise a saving.

How Much Can I Refinance?

The client can refinance up to the amount the new lender approves on its valuation and servicing. The lender’s maximum LVR caps the loan against the property’s value, and serviceability caps it against income. Above 80% LVR, LMI can apply, which Moneysmart notes can outweigh the savings from a lower rate.

Check the Existing Loan

Check the existing loan’s repayment record and exit requirements before you compare replacements, because both change the cost and the approval. Get recent statements for the current loan and the terms of every linked account.

Review repayment conduct first. The new lender reads the existing loan statements, so explain any arrears, hardship arrangement or recent redraw in the application notes.

Then record the discharge requirements and linked items.

• Fixed rate break costs. Record any break cost on a fixed portion as part of the switching cost. The guide to fixed rate mortgage refinance covers break quotes and timing choices.
• Discharge fees. Record the current lender’s discharge fee and its discharge authority form, which every borrower signs.
• Offset balances. Note each offset balance and where the money goes when the loan closes, because the offset link ends at discharge.
• Redraw. Record available redraw and any recent redraws. Redraw ends at payout, and funds redrawn beforehand need a recorded purpose.
• Linked products. List package credit cards, transaction accounts, insurance and direct debits tied to the loan or its package.
• Settlement instructions. Record who holds the certificate of title or registration details, where any surplus funds go and when the payout figure expires.

Compare a Repricing Offer Before Switching

Compare any repricing offer from the current lender against the client’s objectives, features and switching costs before you replace the loan. Moneysmart’s switching guide suggests telling the current lender about a cheaper loan elsewhere, because the lender may cut the rate to keep the client.

RG 273 says a broker must not suggest a client stay in a loan without considering whether that’s in their best interests. It quotes the Replacement Explanatory Memorandum’s example of a broker who discourages a cheaper refinance to avoid a commission clawback. Either decision needs a recorded reason.

Record these details for every repricing request.

1. The client’s authority for you to request the repricing.
2. The offered rate, any conditions and the date the quote expires.
3. The features the client keeps or loses by staying.
4. The person responsible for the next review and its date.
5. The reason the client stays or refinances, with the cost comparison behind it.

RG 273’s home loan health check example describes a broker who finds no benefit in changing and documents that recommendation. Keep the same record when a repricing offer wins.

Prepare the New Application

Build the new application by matching each piece of evidence to the new lender’s own rules, then listing what must happen before settlement. The same client can fit one lender’s income and LVR rules and miss another’s.

Compare the evidence with the new lender’s policy before you submit. Check how the lender treats the client’s income type, its maximum LVR for the loan purpose and the statements it asks for on the existing loan. Bulma’s Policy Advisor answers that kind of question across 52+ lenders and quotes the policy wording behind each answer, which you can keep with the file notes.

Valuation and Settlement Dependencies

List each dependency that must clear before the refinance can settle. Any one of them can move the settlement date.

• Valuation. The new lender’s valuation sets the LVR. A lower figure can trigger LMI or reduce the approved amount, so see the guide to bank property valuation.
• Discharge authority. The current lender needs the signed form before it can prepare the payout.
• Payout figure. The payout must cover the balance, discharge fee and any break cost on the settlement date.
• Security changes. A guarantor release, second property or change of ownership needs its own documents.
• Funding conditions. The new lender’s approval conditions must be met before it books settlement.

Flag released equity at this stage, and send the declared-purpose work to the cash out refinance guide. Keep the refinance file to the debt being replaced and any amount the client has asked for.

The Refinance Mortgage Broker’s Role

A refinance mortgage broker reassesses the client, compares lender routes, prepares the evidence, coordinates the discharge and checks settlement conditions. Reassessment and the lender comparison support the best interests duty. Discharge coordination and settlement checks stop a delay from adding repayments at the old rate.

The broker also explains the result to the client. That includes the saving, the break-even point, the term and anything the client gives up by leaving the current loan.

Set Timing Expectations

Approval and settlement run on separate clocks. Approval is how long the new lender takes to assess the file. Settlement depends on the outgoing lender processing the discharge and both lenders booking the same date.

As at October 2026, Westpac’s refinancing page says an applicant could get conditional approval within one business day. The same page says an online applicant using its Priority Refinance service could get approval within days and settle within a week.

ANZ’s refinancing page says, as at October 2026, that the time depends on the changes being made and whether the client is changing lender. Set the client’s expectation from the lenders involved, and quote approval and settlement as separate dates.

What Delays Approval or Discharge

Check each delay against its cause in this order, starting with the checks you can complete from the file.

Delay	Check	Fix
The new lender asks for more information	Compare the request with the documents submitted	Send the exact document requested and record the date
The valuation comes in low	Recalculate the LVR on the new figure	Adjust the loan amount, add funds or consider LMI before resubmitting
The discharge authority is rejected	Confirm every borrower signed and the loan numbers match	Resubmit a corrected form to the current lender
The payout figure is out of date	Check the figure’s expiry against the settlement date	Request an updated payout figure
A fixed rate portion or linked product is unresolved	Check the break cost quote and linked accounts	Settle the break cost and move or close linked accounts

Verify Completion

Verify completion against records, not the settlement notice alone. Work through these checks after settlement.

1. Confirm the payout matched the current lender’s final figure, with no residual balance.
2. Confirm the new loan account shows the expected funded amount.
3. Confirm the old loan, its offset account and any package products are closed or moved as instructed.
4. Confirm direct debits, salary credits and repayment instructions point to the new accounts.
5. Confirm the first repayment comes from the correct account on the expected date.

The refinance is complete when the old loan statement shows a nil balance and the new loan statement shows the agreed balance, rate and repayment.

Choose the Replacement Loan Structure

Choose the replacement structure on total cost, including any feature the client requests. An offset account only saves money when the interest it offsets exceeds the extra rate and fees attached to it.

Compare the requested offset feature with the replacement loan’s rate, package or account fees, eligible portions and total switching cost. Moneysmart’s guide to choosing a home loan, updated 16 September 2026, says a loan with an offset account can cost more. It adds that an offset balance that stays low, such as under $10,000, may not be worth paying for.

In this hypothetical example, a package loan with an offset charges a $395 annual fee and 5.90% on a $500,000 loan, 0.10% above a basic loan at 5.80%. The package costs about $895 a year more than the basic loan. A $30,000 offset balance saves about $1,770 in interest a year, so the client is ahead by about $875.

With only $5,000 in the offset, the interest saving falls to about $295 a year. At that balance, the same package costs the client about $600 a year more than the basic loan.

Confirm the Offset Before Settlement

Confirm before settlement that the approved product supports the intended offset structure. Check the approval documents, not the product brochure, because a split loan can allow an offset on one portion only.

Record these details in the file.

• Who will open the offset account and link it to the loan.
• Which loan portion the account must offset.
• How the borrower will check the first interest calculation, by comparing the charged interest with the loan balance less the offset balance.

The guide to offset account link checks covers what to do when the first statement shows interest on the full balance.

Refinance an Investment Property

Refinancing an investment property adds rental income evidence, the lender’s investor LVR limits and a loan-purpose record for any extra funds. The refinance sequence stays the same, but each of these items changes what the new lender assesses.

Collect current rental evidence, such as the lease, recent rental statements from the property manager or a rental appraisal for a vacant property. Check what share of the gross rent the new lender counts, because each lender sets that percentage in its own policy. Check its maximum LVR for investment loans too, because a lender’s investor limit can differ from its owner-occupied limit.

Separate the Existing Debt From New Borrowing

Keep refinancing the existing investment debt separate from releasing equity for another purpose. The Australian Taxation Office’s interest expenses guidance, updated 21 May 2026, says interest isn’t deductible on the portion of a loan used for private purposes. That applies whether the private portion arose when the loan started or when it was refinanced.

The same guidance says repayments on a mixed loan must be apportioned across the rental and private portions for the life of the loan. Set up a separate split for any new borrowing, and record its purpose in the application. Send the equity release itself through the cash out refinance guide.

When the evidence is complete, the file shows why the client is refinancing, what it costs, which lender rules it meets and how the client will confirm the result. Submit once the reassessment, the existing loan checks and the settlement dependencies all point to the same benefit.