When to Refinance and Weigh Up the Costs and Gains

The right time to refinance is when the savings or features from a new loan clearly outweigh the cost of switching. A higher rate alone is not enough, so the numbers need to be checked first.

For Richmond homeowners, the question usually comes up at a few moments: when a fixed rate ends, when your circumstances change, or when you want to use the equity in your home. Each moment calls for a slightly different approach.

When Is the Right Time to Refinance a Home Loan?

The right time to refinance is when the total benefit of switching, after all costs, is larger than what you give up. That benefit might be a lower rate, a lower repayment, or features that suit your life better.

There are four common triggers. Your fixed rate period is ending. Your rate has drifted above what new customers are offered. Your income or household has changed. Or you want to access equity for a renovation or investment. If none of these apply, staying put may be the sensible choice.

A loan health check is a good first step. It compares your current rate, fees and features against what is on offer, without any commitment to switch.

What Happens When Your Fixed Rate Period Ends?

When a fixed rate period ends, your loan normally rolls onto the lender's variable rate, which may be higher than rates offered to new borrowers. That makes the end of the term a natural time to compare options.

It pays to start looking a couple of months before expiry. Our page on fixed rate expiry explains your choices, including staying with your lender, moving to a new variable rate, or fixing again. A new fixed rate gives repayment certainty but limits flexibility, and extra repayments are often capped.

If you leave before the fixed term finishes, a break fee may apply. Fees on ending a loan early are restricted for home loans signed on or after 1 July 2011, but a break fee on a fixed rate loan is not covered by that restriction. Check your contract before you move.

How Much Can a Lower Rate Save You?

A lower rate saves you the difference in interest, minus the costs of switching. The only way to know is to run your own numbers.

As an example, take a Richmond owner with a $600,000 balance and 25 years remaining. At the illustrative rate of 6.75% p.a., the principal and interest repayment is about $4,145 a month. If a new loan lowered the rate by 0.50 percentage points to 6.25% p.a. over the same term, the repayment would be about $3,958 a month. That is roughly $187 a month, or about $2,240 a year.

Now weigh the costs. If switching involved around $600 in application and discharge fees, the owner would recover them in a few months. If it involved a break fee of several thousand dollars, the payback would stretch much longer. These rates are illustrative only. Actual rates depend on your deposit size, loan amount and lender.

If you are buying out costs, the payback period matters more than the headline rate. You can use our extra repayment calculator to see how a new rate affects your loan.

Can You Refinance to Release Equity?

Yes, you can refinance to borrow against the value of your home, subject to the lender's valuation and your ability to service the larger loan. The extra debt will raise your repayments and the interest you pay over time.

People do this to renovate, to buy an investment, or to fund a deposit on the next property. Our guide to refinancing to release equity covers how it works in practice.

If you intend to borrow for an investment, how you use the money matters for tax. The ATO says interest is generally deductible only on the part of a loan used to produce income, and any part used for private purposes is not. Mixing purposes inside one loan can complicate your records, so speak with your accountant before you restructure.

A lender must also assess whether the loan is suitable for you. When your loan increases, expect a full assessment of your income, expenses and debts, tested against a buffer above the loan rate. APRA confirmed in May 2026 that this buffer stays at 3 percentage points.

A Richmond Example: Switching Without Increasing Your Debt

Consider a Richmond couple with a loan that has rolled onto a variable rate after their fixed term ended. They have made every repayment on time for several years, and their income has not changed. They want a lower rate but do not want to borrow more.

A broker compares their current loan with other lenders, then requests the payout figure and any fees. In a scenario like this, the saving needs to be higher than the costs. If the saving was around $190 a month, as in the example above, and the switching costs were modest, the switch could make sense within the first year.

Because they are not borrowing more and have a strong repayment history, the lender can give particular weight to that history. They must still pass the lender's serviceability assessment, including the 3 percentage point buffer, and approval is not guaranteed. The lender may also look at a longer repayment history. If approved, the outcome is a lower repayment from the same loan amount. The trade-off is some paperwork and a short period of overlap between lenders while the old loan is discharged.

They can then ask about features such as an offset account. An offset account can reduce interest, but some loans with offset features carry a higher rate or an annual fee, so the feature needs to earn its keep.

Reasons Not to Refinance Yet

You should hold off if the costs would outweigh the savings, or if your finances have weakened since you took out the loan. A switch that only lowers repayments by stretching the term can mean paying more interest overall.

If you borrowed with less than 20 per cent equity, lenders mortgage insurance may be charged again with a new lender. If you hold a government-backed loan, such as one under the 5% Deposit Scheme, moving to a lender outside the scheme can end its benefits. If you are in arrears or under financial pressure, a new lender is unlikely to offer the same repayment level, and talking to your current lender about hardship options is usually the better step.

A broker must act in your interests, which includes telling you when staying put is the better move. You can read more about the process on our refinancing page.

Planning Your Refinance in Richmond

Before speaking with us, gather your latest loan statement, your most recent payslips and a rough idea of what you want the new loan to do. A lender's property valuation will shape how much you can borrow and what rate you can access.

Call one of our team or book an appointment at a time that works for you. We will review your loan, show you the real cost of switching, and tell you plainly whether now is the right time.

Frequently Asked Questions