How to refinance a home loan
Last updated: 31 March 2025 | Estimated read time: 5 Minutes
Refinancing your home loan can be a smart financial move, but it’s important to understand the process and what it entails.
Here’s a comprehensive guide to help you navigate through it:
1. Do your research: review and compare home loans
It’s likely you’ve started thinking about refinancing after seeing an ad for an attractive looking home loan interest rate – but make sure you have thoroughly researched what’s on offer, and look at a few others to compare. It’s important to understand things like upfront and ongoing fees and charges, the features of the loan, and the comparison rate. The comparison rate will help give you a clearer indication of the true cost of a loan, as it includes the interest rate, and most fees and charges relating to a loan, reduced to a single percentage figure – use this to compare home loan comparison rates during your research period.
There could also be key features you want included in the new loan - like an offset sub-account - so be sure to compare home loans online and work out which option works for you.
2. Gather documentation and financial information
When you approach a lender, they will need you to provide documentation for things like income, accounts, etc. Starting the process with all financial documents in order can make the rest of the process easier.
Gather recent pay slips or proof of income, bank statements, credit card and loan statements, to work out monthly expenses.
Make a note of current loan repayments, interest rates (including comparison rates), ongoing fees, and any discharge fees or break costs.
Now that you have an idea of how much you need to borrow, work out how much you can borrow – use our borrowing power calculator, or talk with a lending specialist to talk through what you need, and what you can afford.
3. Talk to lenders or brokers about applying
4. Understand your loan documents before signing
5. The final step. Settlement
Tips for refinancing
Consider upfront charges
There are usually fees associated with refinancing, as well as (in some cases) home loan break costs to pay out an old mortgage early. .
- Loan application (or establishment) fee – a one-off cost to set up the new home loan.
- Valuation fee – to cover a professional property valuation.
- Title protection fee – covers the lender for property fraud and other risks during the title transfer period.
- Settlement fee – covers administrative costs involved with settling the loan.
- Discharge, break, or exit fees – previous lender may charge this. Make sure you read the loan contract you signed with your previous lender so you’re across any such fees you might have to pay.
- Government fees – such as stamp duty or mortgage registration fees.
- Monthly loan fees or annual package fees for the new loan.
- Risk fees to protect the lender, such as Lender’s Mortgage Insurance.
Check if any risk fees will apply
These types of fees usually apply where the amount borrowed is greater than 80% of the property value.
There may be costs involved with refinancing and switching lenders or products. Ranging from loan application fees with your new lender, to a discharge fee with your outgoing lender, an even property valuation and risk fees - refinancing isn’t as straightforward as changing your direct debit details. So before you go and refinance to save a few basis points off of your existing interest rate, make sure you read the terms of your current loans carefully (including break fees, interest rates, comparison rates etc.) and weigh these up against the features of any refinance options you’re considering, including the loan term. Learn more about what fees to expect when refinancing.
Impact on credit score
Lots of things can impact your credit score, including when a credit provider obtains a copy of your report during your credit application. Whilst each of the Australian credit reporting bodies calculate credit scores differently, making multiple applications within a short space of time can negatively affect your credit score. Find out more about credit reporting.
Borrow within your means
Seeing an enticing offer can make you want to borrow more than you need “just in case”, but don’t forget that variable interest rates fluctuate, and fixed interest rates have an end date – and you need to be able to afford repayments comfortably should anything happen.
Want to know more? We’re here to help.
Refinancing a home loan doesn’t have to be complicated. You can apply online with Pepper Money in less than 20 minutes if you are an eligible customer with PAYG Income.
If you're self-employed or just prefer to speak to one of our friendly lending specialists, then submit an online enquiry or call our team on 137 377.
Contributor | Barry Saoud, General Manager, Mortgages and Commercial Lending
Barry joined Pepper Money in July 2021 as General Manager, Mortgages and Commercial Lending. He is responsible for the strategic direction and operating performance across product, credit, and settlements for mortgages, commercial loans, personal loans, and direct sales. Read more.
Want to find out where you stand?
Sign up to our newsletter
If you like this article, you'll love our monthly Real Lives newsletter.
Personal information is collected, used, stored and disclosed in accordance with Privacy Policy. You can opt out of this newsletter at any time by using the unsubscribe link provided at the bottom of each email.
Need some help with your refinancing?
There's a lot refinancing can do; from unlocking your equity to consolidating debts in to your home loan.
Some great resources are here to help you understand your options.
Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
All applications for credit are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply.
The results of the borrowing power calculator are based on information you have provided and is to be used as a guide only. The output of the calculator is subject to the assumptions provided in the calculator (see 'about this calculator') and are subject to change. It does not constitute a quote, pre-qualification, approval for credit or an offer for credit and you should not enter commitments based on it. The interest rates do not reflect true interest rates and the formula used for the purpose of calculating estimated borrowing power is based on the assumption that interest rates remain constant for the chosen loan term. Your borrowing power amount will be different if a full application is submitted and we complete responsible lending assessment. The results in the calculator do not take into account loan setup or establishment fees nor government, statutory or lenders fees, which may be applicable from time to time. Calculator by Widgetworks.
Pepper Money Personal Loans is a brand of Pepper Money Limited. Credit is provided by Now Finance Group Pty Ltd, Australian Credit Licence Number 425142 as agent for NF Finco 2 Pty Limited ACN 164 213 030. Personal information for Pepper Money Personal Loans is collected, used and disclosed in accordance with Pepper’s Privacy Policy & the credit provider’s Privacy Policy.
Pepper Money Limited ABN 55 094 317 665; AFSL and Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.
Pepper and the Pepper Money logo are registered trademarks of Pepper Group Assets (Australia) Pty Limited and are used under licence.
