Why now could be the best time to refinance your home loan

By Evlin DuBose · · 3 min read
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Collage of a woman helping another woman onto a better home loan interest rate by refinancing.

The last year has been wild – between Reserve Bank rate hikes, plummeting property prices, and cost of living pressures, many borrowers have copped it at all angles. Not to mention we’re rapidly approaching the fixed-rate mortgage cliff – yikes. 

But if you’ve been despairing over your home loan, take heart. All this market movement is a handy reminder to make sure you’re getting the best interest rate from your lender. So let’s consider why now could be a great time to refinance.

Should I refinance my home loan now? Pros and cons

Collage of a woman thinking about a piggy bank, AKA her finances.

Refinancing is still a big decision that requires a bit of preparation, so it’s important to start gauging ahead of time whether it could be a good option for you. Doing this gives you a chance to sort your finances and evaluate where you stand with your equity.

After all, you’ll need to qualify for whichever new home loan you apply for, and if it’s been a hot minute since you took out your initial mortgage, times have certainly changed. No one wants to discover they’ve unintentionally become a home loan hostage!

However, if you’ve asked yourself these five important refinancing questions and think it could be the go, there are plenty of benefits. Some of the advantages of refinancing include:

  • Switching to a lower interest rate.
  • Making smaller monthly repayments.
  • Improving your credit score long-term.
  • Receiving cashback upon approval. 
  • Changing to a lender you like better. 
  • Reducing loan fees. 
  • Accessing your equity, which can be used to purchase another property.
  • Shortening your loan term.

Because interest rates have been shooting sky-high lately, there’s a lot of competition among smaller lenders hoping to catch customers jumping ship from the Big Four banks. Competition means lower interest rates and more attractive loan features like offset accounts, which is great news for you. With a little research and loan comparison, you can get an idea of what offers are available to you. 

RELATED: How do ANZ, CBA, NAB and Westpac compare?

However, there are a few important caveats to keep in mind when refinancing your mortgage. Namely:

  • Your credit score may dip short term. This is because anytime you refinance, even if it’s with the same lender, it’s logged as a ‘hard enquiry’ on your credit report. Make multiple of these hard enquiries, and you can look like a dodgy customer, which can hurt your score and ironically make it harder to refinance. 
  • You’ll need to know how much your property is worth. RBA rate hikes have been a major factor in smothering property value growth across the country. If prices have tanked in your area, you may have lost equity, which hurts your chances of refinancing. Get a professional property valuation done so you know what you’re sitting on. 
  • Your lifestyle may have changed and impacted your loan eligibility. Have you had a kid recently? Changed careers? Taken out new credit cards and accumulated some debt? You’re not the same borrower you were when you first started your loan, so you’ll need to get across how your circumstances have changed and how that impacts your loan prospects. 

If you’re unsure where to start, Mozo’s experts do the hard yards for you by comparing the best home loans on the market.  Check out the top options below to start your refinancing journey.

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Last updated 14 September 2024 Important disclosures and comparison rate warning*

Refinance home loan comparisons on Mozo

Promoted

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Fixed Express Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.99 % p.a.
    Fixed 2 years
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Lock in a low 2 year fixed rate with the Mozo award winning Home Lender of the Year. Available for live-in borrowers with just a 10% deposit required. Free extra repayments (up to 20% in fixed period), free redraw and partial offset available. $10 monthly service fee. Aussie support centre. Fast approvals. Up to 6 free offset accounts (T&Cs apply).

  • 3 Year Special Fixed Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    This home loan is available for purchase or refinance, complete with 1, 2 or 3 year fixed rate options. Minimum 10% deposit required.

image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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