Change Home Loan Lenders? Here's How to Save Big

Are you feeling overwhelmed by your current home loan? Perhaps the interest rate feels high, or the terms no longer suit your financial situation. You're not alone. Many Australians find themselves in similar situations, wondering if they can change their home loan lender to secure a better deal. Let's explore the options available to you and how you can make a switch that benefits your financial health.

Understanding Home Loan Refinancing

Refinancing your home loan involves switching your existing mortgage to a new lender or a different loan product with the same lender. The primary goal of refinancing is to achieve better terms—such as a lower interest rate, reduced fees, or more favourable loan features. However, it's crucial to understand the refinancing process and weigh the potential benefits against any costs involved.

Refinancing: Rates, Requirements, and Options

In 2026, the Australian home loan market is competitive, with interest rates ranging from 6.49% to 12% depending on the lender and your financial situation. With over 83 lenders on Esteb and Co's panel, there's a wide array of options to consider. Here's what you need to know:

Eligibility criteria often include a stable income, a good credit score (typically above 650), and sufficient equity in your home (usually at least 20%). Each lender has its own specific requirements, so it's beneficial to shop around or consult with a mortgage broker like Esteb and Co, which can guide you through the process and help you find the best match from their extensive lender panel.

Steps to Change Your Home Loan Lender

Changing your home loan lender can be straightforward if you follow these steps:

1. Review Your Current Loan: Understand your current loan's terms, including interest rate, fees, and any penalties for early repayment.
2. Assess Your Financial Situation: Evaluate your income, expenses, and credit score to understand what loan products you may qualify for.
3. Research and Compare Offers: Use comparison tools or consult with a mortgage broker to explore different lenders and products.
4. Calculate Potential Savings: Consider both the short-term and long-term savings from a lower interest rate versus the cost of switching, which may include discharge fees, application fees, and valuation fees.
5. Apply for Pre-Approval: Once you've identified a suitable lender, apply for pre-approval to understand your borrowing capacity.
6. Submit a Formal Application: Provide necessary documentation such as proof of income, identification, and property details.
7. Settle the New Loan: Once approved, settle your new loan. Your new lender will typically manage the transition from your old lender.

Expert Tips and Considerations

Before making any decisions, consider these expert tips:

• Beware of Hidden Costs: Always ask for a full breakdown of fees associated with switching lenders to avoid surprises.
• Consider Loan Features: Don't focus solely on the interest rate. Features like offset accounts and redraw facilities can offer significant benefits.
• Timing Matters: If you're close to finishing a fixed-rate term, it might be cheaper to wait until it ends to avoid break fees.
• Use a Broker: A mortgage broker like Esteb and Co can offer guidance and access to over 83 lenders, increasing your chances of finding a tailored loan product.
• Regularly Review Your Loan: Even after refinancing, review your home loan every few years to ensure it remains competitive.

Frequently Asked Questions

1. Can I switch lenders if I'm on a fixed-rate loan?
   Yes, but there may be break fees involved. It's essential to calculate if the long-term savings outweigh these costs.
2. How much does it cost to switch home loan lenders?
   Costs can include discharge fees, application fees, and sometimes valuation fees, typically ranging from $500 to $1,500.
3. How long does the refinancing process take?
   Generally, it takes 4-6 weeks from application to settlement, depending on the lender and complexity of the loan.
4. Can I refinance with bad credit?
   It's more challenging but possible. Working with a broker can help you find lenders that consider applicants with less-than-perfect credit.
5. Will switching lenders affect my credit score?
   A credit inquiry is made during the application process, which can temporarily impact your score, but timely repayments on your new loan can improve it over time.
6. What documents are needed to refinance?
   Typically, you'll need proof of income, identification, and details of your current mortgage and property.
7. Is refinancing worth it if I plan to sell my home soon?
   It depends on your financial goals and the costs involved. If savings exceed costs and improve your financial situation, it might be worth considering.