TL;DR
You should refinance your home loan when your interest rate is 0.5% or more above the current market, when your fixed term is expiring, or when your equity or income has improved. Most Sydney borrowers save $200–$600/month after switching.
Refinancing your home loan at the right time can save Sydney borrowers thousands of dollars each year.
Refinancing at the right time can save you thousands of dollars a year. But switch too soon — or for the wrong reasons — and the costs can outweigh the benefits. Here are the five clear signs it's time to have a conversation with a broker.
Australian homeowners leave an enormous amount of money on the table by sticking with their current lender out of loyalty or inertia. The reality is that most lenders reserve their best rates for new customers, not long-standing ones. A survey of Mortgagefy clients found that the average borrower who hadn't reviewed their home loan in 2+ years was paying 0.6%–1.0% above the current market rate.
On a $700,000 loan, that's $4,200–$7,000 every year — money that's simply walking out the door.
Sign 1: Your Interest Rate is 0.5% or More Above the Current Market
Your rate is 0.5%+ above market
This is the most common and compelling reason to refinance. If your current interest rate is significantly higher than what new borrowers are getting, you're effectively subsidising the bank's profit margin with your loyalty.
To check whether your rate is competitive, look up the current best variable rates available on the market — you can use our loan comparison tools or simply call us. As of 2026, competitive variable rates from quality lenders sit around 5.8%–6.3%. If you're paying 6.8% or more on a standard variable rate, there's almost certainly a better option.
The savings calculation is straightforward: on a $650,000 loan with 25 years remaining, every 0.5% reduction in interest rate saves approximately $165 per month, or nearly $2,000 per year.
Find out how much you could save — free
the Mortgagefy team will review your current rate and compare it against our wide panel of lenders. No obligation, no cost.
Sign 2: Your Fixed Rate Term is About to Expire
Your fixed term is expiring (the "rate cliff")
Hundreds of thousands of Australians who fixed their rates at record lows in 2020–2022 are now rolling off those fixed terms onto standard variable rates that can be dramatically higher. This is what the industry calls the "rate cliff."
If your fixed rate period is ending in the next 3–6 months, now is the time to act. You have two options: re-fix with your current lender, or refinance to a new lender offering better terms. Your current lender will typically write to you 60–90 days before the fixed period ends.
Don't wait until your fixed rate expires to start looking. The refinancing process typically takes 3–6 weeks, and if you do nothing, your loan will automatically roll onto your lender's standard variable rate — which is almost never the most competitive option.
Pro Tip
If you're currently on a fixed rate, there will be break costs if you refinance before the fixed period ends. These can range from nothing to many thousands of dollars depending on how rates have moved. A broker can calculate your specific break costs before you make any decision.
Sign 3: Your Equity Has Grown Past the 20% LVR Threshold
Your equity has grown past 20% LVR
When you originally bought your home with less than a 20% deposit, you likely paid Lenders Mortgage Insurance (LMI) and may have accepted a higher rate as a higher-LVR borrower. If your property value has grown and/or you've paid down your loan, your LVR may now be well below 80%.
Lenders often offer significantly better rates to borrowers with lower LVRs — because you represent less risk to them. If you're now sitting at 75% LVR or below, you may be eligible for a lower rate tier that simply wasn't available to you when you first took out your loan.
Additionally, if you're still paying an LMI premium rolled into your loan (some lenders capitalise LMI into the loan balance), refinancing to a new lender resets this — you won't owe LMI on the outstanding balance if you're now above 20% equity.
Sign 4: Your Financial Situation Has Improved
Your income or credit profile has improved
If you've received a significant pay rise, cleared personal debts, transitioned from casual to permanent employment, or repaired your credit history, lenders will now see you as a much lower-risk borrower than when you first applied.
This improved profile can unlock access to lenders and products that weren't available to you originally. For example, if you were previously a self-employed borrower with only one year of ABN history and took a specialist loan at a higher rate, you may now have two or three years of solid financial history and qualify for a full-doc loan at a significantly lower rate.
Similarly, if you previously had any credit blemishes that have now fallen off your file (most defaults and serious infringements disappear from your credit report after 5–7 years), a refinance review is very worthwhile.
Sign 5: You Want to Access Equity for Renovation or Investment
You want to unlock equity for a specific purpose
If your property has grown in value and you want to fund a major renovation, an investment property purchase, or another significant financial goal, refinancing can be the most cost-effective way to access that equity at home loan interest rates.
A mortgage broker compares dozens of lenders simultaneously — giving you a better deal than negotiating with one bank directly.
Many homeowners don't realise they can access their equity through a simple refinance rather than taking out a separate personal loan or business loan at a much higher rate. As long as you're borrowing to 80% LVR or below, you can typically refinance and draw equity simultaneously without paying LMI. For property investors, this is a core strategy for building a portfolio without saving a fresh deposit each time.
The Costs of Refinancing — And When They're Worth It
Refinancing isn't free, and it's important to understand the full cost picture before deciding to switch:
- Discharge fee (exit fee): Charged by your existing lender for closing the loan. Typically $150–$400.
- Break costs: Only applicable if you're on a fixed rate. Can be zero (if rates have risen since you fixed) or significant (if rates have fallen). Always get this figure in writing before proceeding.
- New lender application fee: Some lenders charge an establishment fee, though many waive this for refinances. Typically $0–$600.
- Valuation fee: The new lender will need to value your property. Some lenders cover this, others charge $200–$600.
- Legal and conveyancing fees: Some brokers and lenders cover basic conveyancing costs. Otherwise expect $500–$1,000.
Total refinancing costs typically range from $500 to $2,000, excluding fixed rate break costs. If your annual savings are $3,000–$6,000, you'll recoup the switching costs within 3–8 months — a very strong financial case for refinancing.
Case Study: The Chen Family Saved $6,200 Per Year
The Chen Family — North Ryde, Sydney
Refinanced $820,000 home loan · Saving $516/month
David and Michelle Chen had been with the same major bank for six years. Their home in North Ryde had grown in value from $950,000 to $1.28 million, and they'd paid their loan down to $820,000 — giving them a very comfortable LVR of around 64%.
They were paying 7.04% on their variable rate, having never reviewed their loan since taking it out. A quick market check showed competitive variable rates were available at 6.29% from multiple quality lenders.
Mortgagefy ran the numbers: on an $820,000 loan, refinancing from 7.04% to 6.29% saved the Chens $516 per month, or $6,192 per year. Total switching costs (discharge fee + new lender establishment) were $750.
$6,200
Annual saving
0.75%
Rate reduction achieved
6 wks
Time to complete
Ready to Find Out If Refinancing Makes Sense for You?
The best way to know whether refinancing is worth it in your specific situation is to have a broker run the numbers. At Mortgagefy, we offer a free home loan health check — we'll review your current rate, calculate your potential savings, and present your options across our wide panel of lenders with no obligation to proceed.
Use our loan repayment calculator to get an initial idea, or book a free call with the Mortgagefy team today.
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