How to Refinance Your Home Loan and Save Thousands in 2026

Why Refinancing Matters More Right Now Than It Has in Years

I sat down this week and went through the latest ABS Lending Indicators for December Quarter 2025. The refinancing numbers jumped out at me. A record 640,000 Australian mortgages were refinanced through 2025 - up 20% on the previous year. In the September quarter alone, 164,162 home loans were refinanced, and 61% of those borrowers switched to a completely different lender.

That tells me something I already see in my own business every day: Australians are finally realising their loyalty to their bank is costing them real money.

And the timing is critical. The RBA raised the cash rate to 3.85% in February 2026, with NAB forecasting another hike to 4.10% by May. If your lender passed that increase on (and they will), your repayments just went up roughly $90-$100 per month on a $600,000 loan. That's money you could claw back - and then some - by refinancing to a sharper rate.

I've been broking for over 11 years and sat on the lender side before that. I've processed thousands of refinances, and I can tell you the average borrower who switches saves between $3,000 and $7,500 in the first year alone. Some save far more.

How Much Can You Actually Save? Real Numbers, Not Guesses

Let me show you what I mean with real calculations. I pulled the current rate ranges from our lender panel this week and ran the numbers.

Say you took out your loan two years ago at 6.50% with one of the big four banks. You owe $600,000 with 25 years remaining.

Your current monthly repayment: $4,054

Now, the best variable rates on our panel right now start from 5.49%. If you refinanced to that rate:

Your new monthly repayment: $3,697

That's a saving of $357 per month, or $4,284 per year. Over the remaining 25 years, you'd save over $107,000 in total interest - even accounting for the fact rates will move.

And that's a conservative example. I had a client come in last month who'd been on a 6.89% standard variable with their bank for three years. They'd never asked for a discount, never threatened to leave. We moved them to a non-bank lender at 5.69%. On their $520,000 balance, that saved them $328 per month. Their bank matched the rate the day after we submitted the discharge - funny how that works.

The rate difference that matters

When I look at the ABS lending data, the average owner-occupier refinancer has around 50% equity in their property. That level of equity puts you in the strongest negotiating position possible - lenders fight for low-LVR refinancers because you're low risk.

Here's the gap between what the major banks charge on their standard variable versus what's available on the market right now:

The difference between the top and bottom of that table is $357 per month or $4,284 per year. I see this gap every single week in my office.

When Refinancing Makes Sense (and When It Doesn't)

Not every refinance is a good refinance. I turn away clients when the numbers don't stack up. Here's how I assess it.

Refinancing makes sense when:

• Your rate is more than 0.50% above the best available. At that gap, the savings almost always outweigh the costs within 12 months.
• Your fixed rate period is ending. Banks often roll you onto a high standard variable rate when your fixed term expires. This is the single biggest refinancing trigger I see - and most borrowers don't realise it's happening until they check their statement.
• Your property has increased in value. If your LVR has dropped below 80% thanks to price growth, you're now eligible for significantly better rates. When I look at the ABS figures, the national median home value hit $912,465 in January 2026. If you bought a few years ago, your equity position is probably much stronger than you think.
• You want features your current loan doesn't have. An offset account, redraw facility, or the ability to split between fixed and variable. These features have real financial value.
• Your circumstances have changed. Higher income, cleared debts, better credit score - all of these can unlock better deals.

Refinancing probably doesn't make sense when:

• You're less than 12 months into a fixed rate. Break costs can be brutal - I've seen $10,000-$30,000 in break fees on larger loans. Always ask your current lender for a break cost quote before proceeding.
• Your loan balance is under $200,000. The savings may not justify the effort and costs of switching.
• You're planning to sell within 6-12 months. You may not recoup the switching costs.
• You have a very low rate already. If you're within 0.20% of the best available rate, staying put might be smarter.

The Step-by-Step Refinancing Process

I walk clients through this every week. It's simpler than most people think.

Step 1: Work out what you're actually paying

Log into your current lender's portal or call them. You need three numbers: your current interest rate, your remaining balance, and your remaining loan term. Most borrowers don't know their actual rate - they remember what it was when they signed up, not what it is now.

Step 2: Get a comparison

This is where a broker earns their keep. I compare your current deal against 83 lenders on our panel and show you the gap. You can also do this yourself on the Moneysmart comparison tool, but it won't factor in lender policies, cashback offers, or whether you'll actually get approved.

Step 3: Apply with the new lender

We submit your application with payslips, bank statements, and ID. Most lenders turn around a refinance application in 5-10 business days. The new lender orders a valuation of your property - this is usually free for refinances.

Step 4: Your new lender pays out the old one

Once approved, the new lender issues a discharge authority to your existing bank. Your old bank has a legal obligation to process the discharge within 10-15 business days (ASIC enforces this). The new lender pays out your old loan and your new loan starts.

The whole process typically takes 4-6 weeks from application to settlement. You keep making repayments to your old lender until settlement day - then everything switches over.

What it costs to refinance

• Discharge fee from old lender: $150-$400 (most are around $350)
• Government registration fees: $150-$300 (varies by state)
• New lender application fee: $0-$600 (many waive this for refinancers)
• Valuation fee: Usually free for refinances
• Total typical cost: $300-$1,000

Many lenders also offer cashback deals of $2,000-$4,000 to attract refinancers, which more than covers the switching costs. I always check what's available, but I never recommend a loan purely because of a cashback - the ongoing rate matters far more.

Lender Comparison: Best Refinance Rates Right Now

I pulled these rates from our panel this week. These are for owner-occupier, principal and interest loans - which is what most refinancers are on.

Rates are indicative only and subject to change. Your actual rate depends on your LVR, loan amount, and circumstances. Information current as of February 2026.

Notice the gap between Athena at 5.49% and the big four banks at 5.94-5.99%. That 0.50% difference is worth $3,000-$4,000 per year on a $600,000 loan. But Athena doesn't offer an offset account, so if you keep large savings balances, a lender like ING or Macquarie might save you more overall despite the slightly higher headline rate.

This is why I always say: don't just compare rates. Compare the total cost including features. A 5.69% rate with an offset account where you park $50,000 effectively works out cheaper than a 5.49% rate without one.

What the Banks Don't Want You to Know About Retention Offers

Here's something I learned when I worked on the lender side: every major bank has a retention team whose job is to stop you from leaving. When you tell your bank you're refinancing, they'll suddenly find a discount they "weren't able to offer before."

I've seen banks drop rates by 0.50-0.80% overnight to keep a customer. That discount was always available - they just had no incentive to offer it while you were staying put.

My advice: use a broker to get a genuine approval from another lender first. Then if your bank matches or beats it, you can stay without any switching costs. If they don't match it, you've already got the new loan ready to go.

One thing to watch out for though - retention discounts are often temporary. I've had clients accept a "special rate" from their bank, only for it to quietly revert to the standard rate 12 months later. Always ask whether the discount is for the life of the loan or for a fixed period.

Fixed vs Variable: Which Makes Sense for Refinancers in 2026?

With the RBA having just raised rates to 3.85% and the possibility of another hike, this is the question I'm getting asked most.

When I checked the RBA's February 2026 Statement on Monetary Policy, they flagged that trimmed mean inflation is still at 3.2% - above their 2-3% target. That tells me rates aren't coming down anytime soon.

Here's how I'm advising clients right now:

If you want certainty: Fix 50-60% of your loan for 2-3 years. You'll lock in a known repayment for that portion. Current 2-year fixed rates start from around 5.59% with CBA and 5.69% with Westpac.

If you want flexibility: Stay variable but choose a lender with an offset account. Every dollar in your offset reduces your interest daily. On a $600,000 loan at 5.69%, keeping $30,000 in an offset saves you roughly $1,707 per year in interest.

The split loan approach: Most of my refinancing clients end up splitting - typically 60% variable with offset, 40% fixed. You get the certainty of fixed repayments on part of your loan plus the flexibility and offset benefit on the rest. Read our detailed breakdown of fixed vs variable home loans.

Common Refinancing Mistakes I See Borrowers Make

Chasing the lowest rate without reading the fine print. Some ultra-low rates come with restrictions - no offset, limited extra repayments, or revert rates that jump after a honeymoon period.

Not checking their property value first. Your LVR determines the rate you qualify for. If your property has gone up in value and your LVR is now below 80% or 70%, you unlock better rate tiers. I always run a quick automated valuation before submitting an application.

Extending the loan term back to 30 years. If you've been paying your loan for 7 years, you have 23 years remaining. Some borrowers refinance to a new 30-year term to get lower repayments - but they end up paying more interest over the life of the loan. I always match or shorten the remaining term unless there's a genuine cash flow reason to extend.

Forgetting about LMI. If your LVR is above 80%, you might need to pay Lenders Mortgage Insurance again with the new lender. On a $600,000 loan at 85% LVR, that's roughly $5,000-$8,000. This can wipe out years of rate savings. Always check your LVR before applying.

Not accounting for break costs on fixed loans. If you're in a fixed rate period, your current lender can charge break costs based on the difference between your fixed rate and the current wholesale rate. I've seen break costs as low as $500 and as high as $30,000. Your lender is required to give you a quote - always ask before committing.

Frequently Asked Questions

How often should I review my home loan?

I tell my clients to check every 12-18 months. Rates change, your circumstances change, and new products come onto the market. The borrowers who save the most are the ones who treat their mortgage like any other bill - shop around periodically.

Can I refinance if I'm self-employed?

Yes, but documentation requirements differ. Most lenders want 2 years of tax returns and financials. Some of our panel lenders offer low-doc options with just 12 months of business bank statements. The key is knowing which lender suits your situation - this is where a broker saves you time and rejected applications. See our guide on self-employed home loans.

Will refinancing affect my credit score?

A new loan application creates a credit enquiry, which can temporarily lower your score by a small amount (typically 5-10 points). But a single enquiry from a refinance has minimal impact. What hurts your score is multiple applications across different lenders in a short period - which is exactly why you should use a broker who submits to one lender at a time.

Can I refinance with bad credit?

It's harder but not impossible. Some non-bank lenders on our panel specialise in borrowers with credit blemishes - paid defaults, previous judgments, or low scores. The rates will be higher (typically 1-2% above prime rates), but it can still make sense if you're currently on a very high rate. We've helped clients with credit issues refinance successfully - see our bad credit home loan options.

How much equity do I need to refinance?

Most lenders prefer at least 20% equity (meaning your loan is no more than 80% of your property's current value). With less equity, you may still refinance but could face LMI costs. When I looked at the ABS data, the average owner-occupier refinancer has about 50% equity - which puts them in a very strong position for the best rates.

Is it worth refinancing for less than 0.50%?

It depends on your loan size. On a $300,000 loan, a 0.30% rate drop saves about $75/month - it'll take a year to recoup switching costs. On a $700,000 loan, the same 0.30% drop saves $175/month and you're ahead within two months. I always calculate the break-even point before recommending a switch.

Your Next Step

If you haven't reviewed your home loan in the last 12 months, you're almost certainly paying more than you need to. The ABS numbers I went through for this article show that 640,000 Australians refinanced last year - and the average refinancer has strong equity and saves thousands annually.

Your first step is simple: find out what rate you're actually on, and what rate you could get. You can book a free refinance review with us. We'll compare your current deal against 83 lenders, show you the gap, and tell you honestly whether switching makes financial sense. No obligation, no cost to you - we get paid by the lender.