Refinance a Home Equity Loan? Here's How to Gain Control

In the current financial landscape, many Australians are exploring refinancing options to optimise their home loans. If you're one of them, you might be wondering, "Can I refinance a home equity loan?" The good news is, you can. But before you dive in, it's important to understand how refinancing works, the benefits it offers, and what you need to consider to make an informed decision.

Understanding Refinancing a Home Equity Loan

Refinancing a home equity loan involves replacing your existing loan with a new one, ideally with better terms. This can be particularly beneficial if you've noticed that interest rates have dropped since you took out your original loan, or if your financial situation has improved, allowing you to qualify for more favourable terms. In Australia, refinancing can help you reduce monthly payments, consolidate debt, or access additional cash.

Current Market Rates and Options

As of 2026, refinancing rates in Australia for home equity loans generally range from 6.49% to 12%, depending on factors such as your credit score, the lender, and the loan-to-value ratio. With over 83 lenders in our panel at Esteb and Co, we have access to a wide variety of rates and options to suit different borrower profiles.

Eligibility for refinancing usually requires a minimum credit score of 650, a stable income, and a significant amount of equity in your home. Lenders will also look at your debt-to-income ratio to assess your ability to repay the refinanced loan.

Steps to Refinance Your Home Equity Loan

Refinancing your home equity loan can be a straightforward process if you follow these steps:

1. Assess Your Current Loan: Understand the terms of your existing loan, including the interest rate, remaining balance, and any fees associated with early repayment.
2. Evaluate Your Financial Situation: Check your credit score and ensure your financial documents are in order. This includes income statements, tax returns, and a list of your assets and liabilities.
3. Research Lenders: Use resources like Esteb and Co's panel of 83+ lenders to find competitive rates and terms. Compare offers to identify the best option for you.
4. Apply for Pre-Approval: This step involves submitting an application to your chosen lender to determine how much you can borrow and at what rate.
5. Complete the Application: Once pre-approved, you'll need to complete the full application process, providing detailed financial documentation and undergoing a credit assessment.
6. Close on the Loan: If approved, you'll review and sign the loan documents. The new lender will pay off your existing loan, and you'll start making payments under the new terms.

Expert Tips and Considerations

Refinancing can be a smart move, but it's important to consider the following:

• Evaluate Costs: Refinancing can involve costs such as application fees, valuation fees, and discharge fees. Ensure the savings outweigh these costs.
• Consider the Loan Term: Extending the loan term might lower monthly payments but could increase the total interest paid over time.
• Check for Penalties: Some loans have early repayment or exit fees. Confirm these details with your current lender before proceeding.
• Use a Mortgage Broker: Working with a broker like Esteb and Co can simplify the process, providing access to a wide range of lenders and expert advice.
• Stay Informed: Keep up with market trends to ensure you're getting the best deal possible.

Frequently Asked Questions

1. Can I refinance if my home has decreased in value?
   Yes, but it may be more challenging. You might need to pay down the loan to meet the lender's loan-to-value criteria.
2. How long does the refinancing process take?
   Typically, it takes 4-6 weeks from application to settlement, depending on the lender and your circumstances.
3. Will refinancing affect my credit score?
   Applying for a new loan can result in a temporary dip in your credit score, but with consistent repayments, it should recover quickly.
4. Is refinancing worth it for a small difference in interest rate?
   Even a small reduction can result in significant savings over the life of the loan. Calculate potential savings to decide.
5. Can I refinance with the same lender?
   Yes, refinancing with your current lender may offer convenience and potentially lower fees, but be sure to compare their offer with others.

Refinancing a home equity loan can be a strategic financial move, but it's crucial to weigh the benefits against the costs. By understanding the process, evaluating your options, and seeking expert guidance, you can make a decision that aligns with your financial goals.