Quick Answer:
Sign 1: Your rate is 0.5%+ above market
The most common refinance trigger by far. New customers routinely get rates 0.5%–1% lower than existing customers on the same product, the so-called “loyalty tax.” Banks aren’t malicious about it, but they aren’t generous about it either: the cheapest rates go to acquisition, and existing customers have to ask (or leave) to get them.
For a $600,000 loan, a 0.5% rate gap is roughly $190/month or $2,280/year. Over five years before compounding, that’s $11,400 of avoidable interest. Check your current rate against current market rates today, the gap is almost always larger than you expect.
Sign 2: Your fixed term is ending
If you’re 3–6 months out from a fixed-rate term expiring, you’re at a natural decision point. When the fixed period ends, you’ll usually revert to the lender’s standard variable rate, which is almost always worse than what’s available elsewhere.
The window to refinance is 3–6 months before the fixed period ends. Pre-approval takes 1–2 weeks, settlement coordination another 2–3. If you wait until the day your rate reverts, you’re already paying the worse rate while you arrange the switch.
Sign 3: You’ve built significant equity
If your property has gone up in value, or you’ve paid down enough principal that your loan-to-value ratio is now well below 80%, refinancing can unlock:
- A lower rate (LVR < 80% qualifies for the no-LMI tier)
- Cashout for renovations, debt consolidation, or investment
- Removal of LMI premium capitalised onto your original loan
A $200,000 equity position is usually enough to access most equity-release products. A broker can calculate your current equity in a single call.
Sign 4: Your circumstances have changed
Life events that often trigger refinancing:
- Separation or divorce, one party buys out the other
- New baby, refinance before parental leave drops the assessable income
- Career change, income now harder or easier to verify
- Inheritance or windfall, lump sum to apply against the loan
- Job in a different state, restructure for portability
Many of these have time pressure. Refinancing while your income looks strongest is usually the smart play, not the reactive one.
Sign 5: Your current loan doesn’t have features you need
Older loans often lack:
- 100% offset (not partial)
- Multi-offset (multiple offset accounts on one loan)
- Free redraw
- Loan splits (fixed + variable combination)
- Rate-drop features (lenders that re-rate without refinancing)
For most homeowners these aren’t nice-to-haves, they’re worth thousands annually in interest savings or flexibility.
Sign 6: You’re paying a loyalty tax (or service has slipped)
Some lenders are great at acquiring customers and terrible at keeping them. Service degradation is a legitimate refinance trigger on its own:
- Long wait times for support
- Difficulty getting answers on your own loan
- Branch closures that affect you
- Rate hikes that seem out of step with the market
- Application processes that take weeks instead of days
If your lender is making routine things harder than they need to be, refinancing for service alone is reasonable, even if the rate gap is marginal.
Recognising yourself in 2 or more of these? That’s usually the threshold where the maths firmly favours refinancing over staying put. A 15-minute call will tell you the exact dollar saving available for your situation, plus the break-even on switching costs.
Book a 15-min refinance check → · 0461 117 777
Before you refinance: what to factor in
Switching costs are real but usually smaller than people think:
- Discharge fee from current lender (~$250–$400)
- Mortgage registration (~$200)
- New loan establishment/application ($0–$1,000)
- Break costs if leaving a fixed-rate loan (potentially significant)
- LMI again if your LVR is still above 80%
Total switching cost is typically $500–$2,000 (plus any break costs). For most refinances driven by 1+ of the signs above, this is recouped within 6–12 months of monthly savings.
What to do this week
Three quick checks if you’ve recognised yourself in any of the six signs:
- Check your current rate against current market rates (most lenders publish them)
- Estimate your equity (current property value minus loan balance)
- Book a 15-minute refinance check, broker confirms the saving and the breakeven
If you’d like the personalised version (your exact rate gap, your equity position, your real savings number), book a 15-minute call with Harbir.
Book a 15-min refinance check →
Or call 0461 117 777 | Email info@creditstar.com
Frequently Asked Questions
Q1. How long does refinancing take?
Ans. Typically 4–6 weeks from application to settlement. The first 1–2 weeks cover assessment and approval; the rest is paperwork, valuation, and discharge from your current lender.
Q2. Is refinancing worth it for a small rate difference?
Ans. If the gap is under 0.25%, probably not, switching costs eat the saving. Above 0.5%, the maths usually works. Above 1%, it’s almost always worth investigating.
Q3. What are the costs of
Ans. Typically $500–$2,000 in total fees (discharge, registration, establishment), plus break costs if leaving a fixed-rate loan and LMI if your LVR is still above 80%.
Q4. Can I refinance with my current bank?
Ans. Yes, it’s called a “rate re-negotiation.” You can ask your current lender to match a competing offer before going through a full refinance. Sometimes they will; often they won’t.
Q5. Will refinancing affect my credit score?
Ans. A formal application creates a hard credit inquiry, which causes a small temporary dip in your score. The impact is usually minor and recovers within a few months.
Q6. How often should I refinance?
Ans. Every 3–5 years is a reasonable cadence to at least review. Whether you switch depends on the signs above, not every review needs to end in a switch.
Q7. Can I refinance during a fixed-rate term?
Ans. Yes, but break costs apply and can be significant. Worth doing the maths, sometimes the rate saving still outweighs the break cost, especially on long-dated fixed loans with high original rates.
Q8. Do I need a new property valuation?
Ans. Usually yes, the new lender needs to confirm the property’s current value. Some lenders use automated desktop valuations (free); others require a physical inspection (~$300–$500).
Q9. Can refinancing reduce my loan term?
Ans. Yes. By switching to a lower rate while keeping your repayment the same, more goes to principal, shortening the term significantly. A broker can show you the term reduction at different repayment levels.
Q10. Should I refinance before parental leave?
Ans. Often yes. Lenders assess on current income; parental leave reduces your assessable income for 6–12 months. Refinancing while your income is still at full strength is usually the smarter timing.
This guide is general information only and doesn’t take into account your personal situation. Rates, fees and lender policies change, confirm current figures before relying on any specific number. For advice specific to your circumstances, book a call with Harbir Singh, Credit Representative 506564 of BLSSA Pty Ltd ACN 117 651 760, Australian Credit Licence 391237.
