Refinancing pays out a home loan with a new loan, from the same or another lender. Moneysmart’s advice is to be sure the benefits outweigh the costs before switching. This guide counts the costs and hurdles that sit on that decision, one page each, from what regulators and the law publish.
A guide published by Dotto. General information, not financial advice: it does not arrange loans, give financial advice or name any lender, broker or product. To check a rule for yourself, use ASIC’s Moneysmart; if a complaint to a lender is not resolved, the Australian Financial Complaints Authority (AFCA).
Drawn for this guide. The crossed-off days stand for no particular deadline. The ACCC found that switching lenders can take many weeks, sometimes months.
Six pages to turn
Moneysmart says refinancing for a lower interest rate might save money. The pages below are about what can stand between that rate and a saving: fees, insurance, the test a new lender applies, the offers designed to move a borrower, and what is left when a new loan is not possible.
Why a new lender can say no, asking the current lender, hardship rights and free financial counselling.
Dates on the wall
Every rule in this guide has a date it was made or last confirmed. These are the ones the six pages rest on, oldest first.
July 20111
From this date, early termination fees on residential loans are prohibited, with limited exceptions that include break fees.
December 20205
The ACCC publishes the final report of its home loan price inquiry, on what stops borrowers switching lenders.
October 20216
APRA tells banks to test new borrowers at a rate at least 3 percentage points above the loan’s rate, up from the 2.5 points commonly used.
June 20239
APRA writes to banks about exceptions to lending policy, noting that some borrowers refinancing with another lender may no longer meet standard criteria.
February 20261
APRA’s limits on new lending at a debt-to-income ratio of six or more take effect.
May 202628
APRA confirms the serviceability buffer will remain at 3 percentage points.
None of these dates is a deadline for anyone’s loan. They are when the rules were set or confirmed.
How this guide is kept
It quotes no interest rate and names no lender, broker or comparison site. Where a figure appears, its date and source sit beside it. Where a rule could be read as advice for one person’s loan, the page describes the rule and points to the body that publishes it.
For a borrower’s own numbers, Moneysmart’s mortgage switching calculator works out whether a switch would save money and how long it would take to recover the cost of switching. Moneysmart describes its results as a model, not a prediction.
