Refinance Home Loan? Here's How to Save Big (2026)

Are you considering refinancing your home loan within the first year, but unsure if it's a viable option? You're not alone. Many homeowners face this dilemma, whether due to changing financial circumstances, a sudden drop in interest rates, or the desire to tap into better loan features. The good news is, refinancing early can be done under the right conditions, but it requires careful consideration and understanding of the current market landscape. Let's dive into how you can make an informed decision.

Understanding Refinancing in the First Year

Refinancing a home loan involves replacing your current mortgage with a new one, typically to secure a lower interest rate or adjust loan terms. While many lenders prefer you to wait at least 12 months before refinancing, it is possible to do so earlier if you meet certain criteria. The key is understanding the costs and benefits, as well as how the current market conditions in 2026 might impact your decision.

Current Market Conditions and Key Information

As of 2026, the Australian mortgage market is experiencing a dynamic shift. Interest rates fluctuate between 6.49% and 12%, depending on the lender and your financial profile. The Reserve Bank of Australia has made several adjustments to the cash rate, influencing these fluctuations. Homeowners are also seeking more flexible loan products that better suit their financial goals.

Refinancing within the first year generally requires you to have a solid credit score and equity in your home. Lenders on Esteb and Co's panel of 83+ lenders often look for a combination of factors, including:

• Credit score of 700 or above
• At least 20% equity in your home
• Stable employment history
• Proof of income stability

Steps to Refinancing Your Home Loan

Refinancing within the first year can be straightforward if you follow these steps:

1. Evaluate Your Financial Situation: Review your current loan terms, interest rates, and any fees associated with your existing mortgage.
2. Research Lenders: Use resources like Esteb and Co to compare offers from over 83 lenders, focusing on interest rates, fees, and loan features.
3. Check Eligibility: Ensure you meet the lender's criteria, including credit score and home equity requirements.
4. Calculate Costs: Consider any break costs or exit fees associated with refinancing early. Some lenders offer fee waivers, which can be beneficial.
5. Apply for Pre-Approval: Once you have a lender in mind, apply for pre-approval to understand your borrowing power and terms.
6. Submit a Formal Application: Gather necessary documentation, such as payslips, tax returns, and bank statements, to support your application.
7. Settle the New Loan: Once approved, your new lender will help you transition from your old loan to the new one.

Tips and Considerations

Refinancing early can be beneficial, but it's essential to weigh the pros and cons carefully:

• Understand Fees: Some lenders charge break fees for early refinancing. Calculate these costs against potential savings from a lower interest rate.
• Consider Long-Term Goals: Ensure the new loan aligns with your long-term financial objectives, such as debt consolidation or renovation plans.
• Stay Informed: Keep up with market trends and cash rate changes, as these can impact your refinancing decision.
• Consult Professionals: Seek advice from a mortgage broker, like those at Esteb and Co, to navigate lender requirements and maximise your options.

Frequently Asked Questions

1. Can I refinance if I have a fixed-rate loan?
   Yes, but you may incur break costs. It's crucial to calculate whether the savings from refinancing outweigh these fees.
2. How does refinancing affect my credit score?
   A hard inquiry is made when you apply for a new loan, which can temporarily impact your credit score. Over time, responsible repayment can improve it.
3. What are the benefits of refinancing early?
   Potential benefits include lower interest rates, better loan terms, and access to additional features like offset accounts.
4. Can I refinance with bad credit?
   While challenging, it's not impossible. Some specialist lenders cater to those with less-than-perfect credit, but the terms might not be as favourable.
5. Is there a limit to how often I can refinance?
   Technically, no, but frequent refinancing can incur costs and impact your credit score, so it's essential to have a clear reason and strategy.
6. Will my lender allow early refinancing?
   Policies vary, but many lenders are open to early refinancing if you meet their criteria. Always check your current loan agreement for specific terms.
7. How long does the refinancing process take?
   Typically, the process can take 4-6 weeks, but it may vary depending on your lender and the complexity of your financial situation.