Refinancing is one of those things people know they should probably look into, but keep putting off. It feels complicated. It sounds like it'll take ages. And your current bank seems fine, right?
In reality, refinancing is often simpler than people expect, and the potential savings are frequently significant. Here's how it actually works.
What is refinancing?
Refinancing means moving your mortgage to a different lender, or restructuring it with your existing lender on better terms. The goal is usually to get a lower interest rate, a better loan structure, or both.
It's most commonly done when a fixed rate expires, that's the natural moment to reassess. But you can also refinance mid-term by breaking your existing fixed rate, which may involve a break fee.
When does refinancing make sense?
The most obvious trigger is when your fixed rate expires and your bank offers you a refix rate that's not competitive. Banks often rely on customer inertia, they know many people will just accept what they're offered without shopping around. That's exactly where value is lost.
Other situations where refinancing is worth looking at:
- Your financial situation has improved significantly since you took out the loan (better income, lower debt), you may now qualify for better rates
- You want to restructure your loan (e.g. split fixed/floating, change your repayment schedule, consolidate debt)
- You want to access equity to renovate, invest, or buy another property
- You feel like you're not getting good service from your current lender
"Banks rely on inertia. Most people accept whatever their bank offers them at refix time without checking if it's competitive. That gap is often where the most money is left on the table."
What about break fees?
If you're in a fixed rate period and want to refinance before it ends, your lender will charge a break fee. This is calculated based on the difference between your current rate and current wholesale rates, and how long is left on your term.
Break fees can range from a few hundred dollars to tens of thousands, depending on the rate difference and loan size. Sometimes the savings from refinancing outweigh the break fee. Sometimes they don't. I'll run the numbers for your specific situation so you know whether it's worth moving now or waiting for the natural refix date.
Don't assume refinancing isn't worth it because you're mid-term. Even with a break fee, the long-term savings from a significantly better rate can more than compensate. It's always worth getting the numbers done.
How the process works
We review your current situation
I look at your existing loan, the rate, structure, remaining term, and any break fee implications. I also get a picture of your current income and financial position.
I shop the market on your behalf
I compare your current deal against what's available across multiple lenders. I have access to rates and products that aren't always advertised publicly.
I present you with options
I'll show you what the realistic alternatives look like, including the monthly saving, the total interest difference over the life of the loan, and any costs involved.
You decide, I handle the paperwork
If you want to proceed, I manage the application with the new lender. This includes gathering documents, preparing the application, and managing the settlement process.
Your mortgage moves across
Settlement typically takes 4-6 weeks from application. Your old mortgage is paid out, your new one begins. Often there's a cash contribution from the new lender to cover legal costs.
What do you need to provide?
- Recent payslips (2-3 months) or two years of financials if self-employed
- Bank statements (3 months)
- Details of existing debts and credit commitments
- A current property valuation (the lender usually organises this)
- Your existing loan details (I can often get these directly from your lender)
One thing people are often surprised by: the new lender often contributes a cash amount toward legal and refinancing costs, typically $1,000-$2,000. This means refinancing can sometimes cost you very little out of pocket, even with legal fees involved.
The bottom line
Refinancing is one of the highest-value things most homeowners can do, and it's one of the things most people keep putting off. If you haven't had your mortgage reviewed in the past 12 months, it's worth a conversation. The process takes less time than most people think, and the potential saving can be material.
A free review costs you nothing. I'll tell you honestly whether refinancing makes sense for your situation, and if it does, I'll handle the process for you.