Refinance Home Loan

Are you comparing your current loan rates, looking to move house or just thinking of different home loan options?

When looking for the best value refinance home loan for you, it is imperative that you think about why and when you should refinance. Just like with most things, learning to crawl before you walk is essential and diving straight into the deep-end may end up costing you more than it’s worth.

That’s why we’ve put together a comprehensive guide to help you confidently refinance your home loan.

Once you’ve familiarised yourself with the process of refinancing, consult Homestar’s refinancing and home loan experts about your specific circumstances and the best option for you. Whether you’re looking for Owner Occupied or Investment loan options, Homestar can offer you personalised service and expert knowledge with amazing rates.

Everything You Need to Know About Refinancing Your Home Loan

Get yourself a better home loan deal. All the information you need to make refinancing your home loan as easy and transparent as possible:

Deciding When (and If) You Should Refinance

Other Refinancing Considerations to Make

Continue reading for a comprehensive overview.

Planning Your Home Loan Refinancing Process

What is Refinancing?

Refinancing is swapping out your existing home loan for a new one, possibly offsetting some of the balance during the process. 

You are essentially taking out a new mortgage in order to pay off your current mortgage, but unlike securing your first mortgage, most of the technicalities are handled by your existing lender making it relatively simple in comparison. 

Refinancing your home loan can help you take advantage of lower interest rates, as well as any liquidity you may now have at your disposal. Conversely, you could also make use of a cash-out refinance in order to leverage your equity toward home improvements or other asset acquisitions. It’s also a flexible method used to change the conditions of your home loan such as the duration or people listed in the loan. 

Keep reading to learn more about the options available to you and how you can best utilise them to make the most of your financial situation. 

Should I Refinance My Home Loan?

At first glance, swapping out your home loan for another one may seem counterintuitive and you may be asking yourself what’s the point? Well, there are a handful of reasons why people look to refinance their mortgage including:

Leveraging better interest rates

Opportunities to reduce their interest rates are the primary reason why people turn to refinancing. If interest rates have plummeted from when you initially signed up for your existing home loan, you’re probably better off refinancing your existing home loan so that you can take advantage of the lower interest rate and pay less in monthly interest repayments. It is worth noting that refinancing does come at a cost, so just make sure to compare the costs with potential savings to check if it’s worth your time. Our refinance calculator makes it easy to weigh up the numbers side by side.

Shortening the loan term

A home loan is a long commitment and it’s likely that your financial situation may have improved dramatically since you first signed up for it. If you have the cash flow to do so, refinancing could potentially shave years off your loan contract. Shortening the loan term would generally result in higher monthly mortgage repayments, but when coupled with low-interest rates you could end up cutting time off your mortgage for little to no trade-off.

Changing the loan type

Both variable and fixed-rate mortgages have their own pros and cons and there are multiple reasons why the grass may be greener on the other side. For instance, you may have applied for a variable-rate home loan in order to minimise interest rates while they were sky high and now you want to refinance to a fixed home loan while the rates are still low. On the other hand, maybe you have paid off enough of your fixed-rate mortgage that you are considering swapping over to the more flexible option.

Accessing the equity in your property

Withdrawing the equity you already have in your home by refinancing can be a popular way to borrow a lump sum of money without exorbitantly high-interest rates. Refinancing for the purposes of accessing equity entails taking out a larger loan to gain instant access to the difference in cash. For instance, if your home loan is $600,000 and you’ve paid off $75,000 of it, you may be eligible to take out a new loan of $675,000 and pocket the difference in cash.

How Does Refinancing Work?

Generally speaking, there are three types of refinancing you can apply for. Whichever one you should choose will depend on your specific home loan situation.

Rate-and-Term Refinance Loan

This type of refinancing is the most common and the overall goal is to change the interest rate, loan term, or both without making any changes to the loan amount. This option is ideal for those trying to cut costs from their monthly repayments.

Rate-and-term refinancing is also a great way to convert your loan from a variable rate to a fixed rate if you are looking for stability during a volatile economic period.

Cash-Out Refinance Loan

Cash-out refinancing refers to taking out a new loan amount larger than your current mortgage in order to “cash out” the equity that you already hold in the property. By taking out a larger loan you can withdraw the difference in cash to use how you see fit.

Although this does result in having to pay off a larger loan, the instant liquidity you obtain can go toward renovations, debt consolidation, or other asset acquisitions. Just keep in mind that stamp duty and a mortgage registration fee may apply if you end up increasing your loan amount.

Cash-outs are advantageous as they allow you to borrow money at a much lower interest rate than you would otherwise be able to.

Cash-In Refinance Loan

One reason why you may want to refinance your home loan may be because you may have gained access to an unprecedented amount of cash. If you have a significant amount of new money available to you then you may look to “cash in” to refinance and reduce your overall mortgage balance.

A cash-in refinance is worth considering if you’re behind on your mortgage repayments, want to qualify for a lower interest rate, or keep your mortgage amount below certain limits for credit rating purposes.

Why should I consider refinancing?

Save money now with
lower interest rates.

Home loan refinancing could help you find a better interest rate and save you money in the short and long-term. You may be able to consolidate debt into fewer payments, and depending on your loan terms, make additional repayments or access redraw when you need.

couple seating on couch inside home
Couple seating at porch kissing

Choose fixed or flexibility

A fixed rate home loan provides a guarantee of what your repayments will cost over the loan period. A variable loan provides more flexibility to make extra repayments when you like, and save you interest with an offset account. If you decide to choose a split loan, you have the option to do both!

Access equity when you need

Depending on the terms of your loan, you could also be able to use the equity in your property for a home renovation, investing in other assets, or other significant projects.

hand shot using laptop

When Can You Refinance a Home Loan?

There are a few key considerations in regards to timing that must be made prior to refinancing your home loan. These include personal and economic factors that may have a significant impact on your ability to meet the eligibility criteria.

  • How long have you been under contract with your current lender?
    This is probably the first question you want to ask yourself before considering a refinance. If you have been with your current loan provider for less than 12 months, the exit fees associated with refinancing alone may offset any benefits from lower interest or shorter terms.
  • What do the interest rates look like?
    Taking into consideration the current interest rates along with your given financial situation is key to understanding whether now is the right time to think about refinancing your home loan. If the RBA (Reserve Bank of Australia) indicates that interest will be dropping and other financial institutions are offering better rates than your current lender, it may be an ideal time to think about refinancing to a new lender. Similarly if the RBA announces rising rates, it may be worthwhile locking in a fixed-rate loan before the rates begin to trend upwards.
  • Are you looking to sell or buy another property?
    If you are thinking of selling your property it may be good timing to seek out and assess the refinancing opportunities that are available to you as well.

How Much Equity Do I Need to Refinance?

Since your equity essentially serves as your deposit when refinancing your home loan, 20% is usually the industry standard required. This means that if your property valuation is $800,000, you must have less than $640,000 remaining on your loan balance.

It is still possible to qualify for a refinance even if you hold less than 20% equity. However, it’s far from desirable since you’ll need to take up LMI (lenders mortgage insurance) which can amount to tens of thousands of dollars depending on the size of your home loan. If you’ve already paid out LMI for the purposes of your current loan, it’s unlikely that it’ll transfer over.

How to Refinance a Home Loan

1. Compare Your Options

The first stage of refinancing involves much the same as the initial steps taken when applying for your first home loan. Be sure to compare as many loan products as possible to ensure you are getting the best possible interest rate and loan terms before committing.

If you’re struggling to find a deal that’s right for you, Homestar Finance has got you covered. We continue to have some of the lowest and most competitive rates in the industry and offer a range of loan products that suit everyone, from the first home buyer to the seasoned investment property wheeler and dealer. 

2. Assess the Costs

The next step is to ensure that you are familiar with the refinancing costs allocated by your current home loan provider.

Costs of refinancing may vary depending on the terms and conditions specified upon signing your loan agreement. You may also need to pay out a break fee if you are engaged in a fixed-rate loan and are looking to move over to another lender before the fixed term expires.

One option is to contact a mortgage broker who can offer independent advice on your chosen financial institution and their lending criteria, or suggest an alternative to ensure that you’re saving money where you can.

3. Apply and Sign

Once you’ve determined the right home loan refinance for you, it’s time to submit your application. Most home loan providers will allow you to apply online and you will need to provide the same documentation as when you lodged your first mortgage application.

The lender will then conduct a property valuation to see if the value of your house has changed since your first mortgage. If you meet all of the eligibility criteria, they will approve you for a home loan refinance and will forward through the necessary forms and contracts for you to proceed.

In addition to our fast personalised service, we pride ourselves on making sure our customers have access to all the information they need to make the best decision for their home loan journey. We have a number of tools and resources available to get you started. 

Note: When refinancing, you’ll need to be aware of possible fees you could be charged by your current lender. These could be discharge fees, early exit fees or break cost fees. Your new home loan will also attract its own fees for set-up and establishment, but if you would like more information our rates + fees are available on all product pages on the Homestar Finance website 

Refinance Costs

An important part of refinancing to consider is costs involved when you switch from your existing lender. These exit fees will vary widely from person to person, depending on factors such as how long you’ve been with your current lender, loan features, etc.

Some of the main ones to think about include but are not limited to:

  • Discharge fees: An administration fee paid to your current loan provider to release the existing home loan in full and prepare required documentation for the new lender
  • Break fees: If you’re contracted under a fixed-rate home loan, you may be subject to additional fees if you look to refinance and break the contract within the fixed term
  • Ongoing fees: Certain lenders will charge an ongoing annual fee. It’s important to check if your current or new provider charges monthly or ongoing fees and if this will affect your exit fees
  • Application fees: These are fees that are necessary for a new home loan application
  • Valuation fees: Are charged by the new loan provider when they are required to assess the current value of your property prior to approving the loan
  • LMI (Lenders Mortgage Insurance): If your equity in the property is less than 20%, your new lender may charge you for insurance as a safety net

Refinance Calculator

If you’re in the process of working out everything that you need to consider, using our home loan refinance calculator is a good place to start. Find out the potential benefits of switching your mortgage, including the savings you could make.

How Long Does It Take to Refinance a Home Loan?

The time needed to complete the refinancing process will be completely different from provider to provider and can take anywhere between 1 week to 2 months. It can depend on a number of factors including:

  • How quickly you provided the necessary documentation
  • How comprehensive your application is
  • The length of the review process for your new provider

At Homestar Finance, we ensure that the refinancing process is as straightforward as possible – click here to learn more.

All Homestar Products

Explore our market-leading range of home loan options, rates and features:

Star Gold

Variable Principal & Interest

1.79%

Interest rate p.a.1a

1.84%

Comparison rate p.a.1a,2


  • Up to 60% LVR
  • Offset Account
  • Visa Debit Card Provided with ATM Access
  • Unrestricted Extra Repayments
  • Free Online Redraws
  • Pay Anyone & BPAY® Available
  • Multiple Loan Splits Possible
  • Weekly, Fortnightly or Monthly Repayments
  • Schedule Recurring Payments or Transfers
View Product

Star Essentials

Variable Principal & Interest

2.24%

Interest rate p.a.1a

2.27%

Comparison rate p.a.1a,2


  • Up to 80% LVR
  • Unrestricted Extra Repayments
  • Free Online Redraws
  • Pay Anyone & BPAY® Available
  • Multiple Loan Splits Possible
  • Weekly, Fortnightly or Monthly Repayments
  • Schedule Recurring Payments or Transfers
View Product

Star Classic

Variable Principal & Interest

2.34%

Interest rate p.a.1a

2.37%

Comparison rate p.a.1a,2


  • Up to 80% LVR
  • Offset Account
  • Visa Debit Card Provided with ATM Access
  • Unrestricted Extra Repayments
  • Free Online Redraws
  • Pay Anyone & BPAY® Available
  • Multiple Loan Splits Possible
  • Weekly, Fortnightly or Monthly Repayments
  • Schedule Recurring Payments or Transfers
View Product

Star Classic Fixed

Fixed Principal & Interest From

5.14%

Interest rate p.a.1a

2.62%

Comparison rate p.a.1a,2


  • Up to 80% LVR
  • Extra Repayments up to 20k p.a.
  • Free Online Redraws
  • Pay Anyone & BPAY® Available
  • Multiple Loan Splits Possible
  • Weekly, Fortnightly or Monthly Repayments
  • Schedule Recurring Payments or Transfers
View Product

Star Classic

Variable Principal & Interest

2.54%

Interest rate p.a.1b

2.57%

Comparison rate p.a.1b,2


  • Up to 80% LVR
  • Offset Account
  • Visa Debit Card Provided with ATM Access
  • Unrestricted Extra Repayments
  • Free Online Redraws
  • Pay Anyone & BPAY® Available
  • Multiple Loan Splits Possible
  • Weekly, Fortnightly or Monthly Repayments
  • Schedule Recurring Payments or Transfers
View Product

Star Classic

Variable Interest Only

2.84%

Interest rate p.a.1b

2.87%

Comparison rate p.a.1b,2


  • Up to 80% LVR
  • Offset Account
  • Visa Debit Card Provided with ATM Access
  • Unrestricted Extra Repayments
  • Free Online Redraws
  • Pay Anyone & BPAY® Available
  • Multiple Loan Splits Possible
  • Monthly Repayments Only
  • Schedule Recurring Payments or Transfers
View Product

Star Classic Fixed

Fixed Principal & Interest From

5.34%

Interest rate p.a.1b

2.82%

Comparison rate p.a.1b,2


  • Up to 80% LVR
  • Extra Repayments up to 20k p.a.
  • Free Online Redraws
  • Pay Anyone & BPAY® Available
  • Multiple Loan Splits Possible
  • Weekly, Fortnightly or Monthly Repayments
  • Schedule Recurring Payments or Transfers
View Product

Check out our calculators

Working out potential home loan repayments? Looking at loan refinancing options? Just curious? Our range of calculator tools can help you make informed decisions on the best products or offerings to add value, reduce repayment stress and save money.  

Take Me There

Streamlining the process

Refinancing or switching your home loan can be one of the best financial decisions you can make – with a range of products available we’re driven to help our customers find the product terms, rates and features that will help you best in the long run.  

At Homestar we’re here to make the loan refinancing process as easy and fuss-free as possible. Our team of Loan Specialists will be able to guide you through the process from beginning to end, and we’re available to answer any questions you have along the way.  

1

Give us a call

on 1300 462 209, fill in the contact form, or chat online
2

Our Sales Assessment team

will get you started with all information you need
3

Meet your dedicated Loan Specialists

at a time most convenient to you
4

Enjoy the stress free, hassle free

process that Homestar has to offer.

Frequently Asked Questions About Refinancing



What Happens to My Redraw When I Refinance?

You can opt to either extract the available funds and refinance with the total amount (loan balance + redraw balance), or you can leave the redraw balance untouched and deduct it from the total loan amount when refinancing.

What Are the Tax Implications For Refinancing an Investment Property in Australia?

Most costs associated with refinancing can be claimed under tax deductions when it comes to investment properties. Exit fees and borrowing costs such as loan application fees, legal fees, LMI, refinance stamp duty are all tax-deductible.

What Should I Consider Before Changing Home Loan Lenders?

At the end of the day the main points to consider are the loan product options available, fees and other associated costs and whether refinancing your home loan would actually prove to be financially beneficial.

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    1 Rates shown apply to new eligible Owner Occupieda or Investment loansb only, loan limits may apply depending on your product (refer to the product page) and at least one applicant is on PAYG employment. After a fixed rate term, a variable rate will apply. Rates are subject to change without notice. Existing borrowers may have different interest rates which are dependent on the rate offered to the borrower at the date when a home loan settled and any reductions or increases the lender decided to make on the existing loan over time. Accordingly, there is not one standard variable rate that applies to all Homestar home loans and existing customers can confirm their current rate(s) by logging in to internet banking or by contacting customer service. Terms, conditions, and eligibility criteria apply.

    2 Comparison rates are based on a basic Homestar loan, on a $150,000 loan amount over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

    Other fees and charges may apply.

    DISCLAIMER: Terms, conditions and eligibility criteria apply to all our loan products and features. Fees, charges and disbursements are payable. Final approval is subject to credit assessment. Information valid as at 12th April 2022 which is subject to change without notice. Third party cost(s) incurred by service provider(s) are payable and may vary or increase depending on the service provider, nature of the service and request. Any additional cost(s) are passed on directly to the applicants(s). If there is a variation or an increase, a separate quote will be provided. Please consider if the product is appropriate for your individual circumstances. If you need assistance or have any questions about a product or feature and its suitability, please contact our Loan Specialists.

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