Should you refinance your home loan in 2026?

Refinancing replaces your existing home loan with a new loan, either through your current lender or another lender.

People commonly refinance to seek a lower interest rate, reduce repayments, access different features, consolidate eligible debts, change their loan structure or access available equity.

However, refinancing is not automatically beneficial. The potential savings should be compared with the costs, risks and effect of the new loan term.

When refinancing may be worth investigating

It may be appropriate to review your loan when:

• your interest rate is no longer competitive
• a fixed-rate period is ending
• your property value or equity position has improved
• you need an offset account or different loan features
• your financial circumstances have changed
• you want to restructure investment and owner-occupied debt
• your lender will not provide a competitive retention offer
• you have several debts and want advice about possible restructuring.

A review does not necessarily mean you should change lenders. Your existing lender may offer a better rate or a more suitable product without requiring a full refinance.

Work out the genuine saving

Compare the proposed loan with your existing loan using:

• the interest rate
• expected repayments
• annual and monthly fees
• application, valuation and settlement fees
• discharge or break costs
• lender’s mortgage insurance
• cashback conditions
• the remaining loan term
• the total estimated interest over time.

ASIC’s Moneysmart specifically recommends checking switching costs, loan terms and the possible effect of lender’s mortgage insurance before refinancing.

Be careful about restarting the loan term

A refinance may lower monthly repayments simply because the debt is spread across a new 30-year term.

For example, a borrower with 20 years remaining who refinances over 30 years may obtain a lower required repayment but remain in debt for longer. Unless additional repayments are made, this can increase total interest.

A fair comparison should generally examine the new loan over the existing remaining term as well as the lender’s maximum available term.

Will lender’s mortgage insurance apply again?

If your loan represents a high proportion of the property’s value, the new lender may require lender’s mortgage insurance.

Any premium previously paid to the existing lender generally does not transfer to the new lender. A new premium can materially reduce or eliminate the expected refinancing benefit.

Using equity when refinancing

Refinancing can provide access to equity, but equity is not cash until it is borrowed or realised through a sale.

Increasing the loan balance increases your debt and may increase repayments and total interest. The lender will assess the purpose of the additional borrowing, your ability to repay it and the proposed security.

Where funds will be used for an investment or business purpose, obtain appropriate taxation and legal advice before restructuring the loan. The tax treatment generally depends on how borrowed funds are used, not merely which property secures the debt.

Do not refinance solely for a cashback

A cashback may help offset switching costs, but it should not outweigh the ongoing rate, fees, loan features or total cost.

Check:

• eligibility requirements
• minimum loan size
• how long the loan must remain open
• whether the rate is competitive after the cashback
• whether any clawback or repayment condition applies.

What lenders will assess

A refinance remains a new credit application. The lender may review your income, expenses, liabilities, repayment history, credit report, employment position, property value and loan purpose.

An increase in property value does not, by itself, establish that a refinance will be approved.

Speak with a mortgage broker before switching

A broker can compare the available refinance options with your existing loan and help identify the expected break-even period.

Call to action: Request a home loan review through finweb to compare your existing loan with available alternatives, including estimated repayments, switching costs and features.

*General information only. Refinancing may not be suitable for every borrower. Credit applications are subject to lender criteria, responsible lending requirements and approval.*