Refinance your mortgage to lower interest rates can make a big difference in your financial future. This is more than just saving money on your monthly payments. It’s also a complex and time-consuming process that requires lots of planning.

The answers to common questions regarding refinancing your home loan can be found in Your Mortgage. These are the steps you need to take to maximize your strategy.

Step 1 – Identify the reasons you want to refinance

You should first ask yourself if refinancing is right for you at this point in your contract. Experts agree that now is the best time to refinance your mortgage. This is especially true given record-low interest rates.

These are just a handful of situations where refinancing makes sense.

  • You are not paying a competitive rate, but there are lower rates.
  • Your property’s value has increased and you want to access your equity
  • There have been changes in your personal and financial lives
  • Consolidate any credit card debts.

Refinancing might not be the right choice for you. Here are some reasons why refinancing is not the best option.

  • Your break costs are way too high
  • Your equity is less than 20% of the property’s value
  • There is no reliable source of income anymore
  • You plan to sell your property

Step 2: Check your rating

Higher credit ratings than the average can get you a better rate. While the requirements for refinances vary from lender-to-lender, you must have a minimum score 622. Below is a table that displays the credit scores you can expect to get a lower rate.

Credit score

Possibility to obtain a lower interest rates

Excellent (833-1200)

You can easily access a higher interest rate and more financing options.

Excellent (726 to 832).

There are good chances of getting a lower interest rate.

Good (622 to 755)

There’s a good possibility that your interest rate will be lower

Average (510 to 621).

Lenders will need to evaluate applicant’s financial situation

Below the average (509 or lower)

Refinances are not recommended as the interest rates could be very high if approval was granted.

Step 3 – Determine the property’s value.

Before refinancing your property, it is important to have an accurate estimate of its value. Research the sales history of similar houses in your area or ask your local realtor to calculate it.

Step 4: Compare interest rate

Compare the interest rates offered from different banks, credit cooperatives, and mortgage companies to discover better rates. Mozo, Finder or Rate City make it easy to compare rates online. Before switching to another lender, make sure that you obtain a loan with a lower interest rate and features that are most appropriate for your financial situation.

The table below shows some of the top lenders for mortgage refinancing based on Mozo’s 8 January figures:


Home loan

Interest rate

Smart Booster Home Loan

(1-year discounted variable rate, owner occupier, principal & interest, <80% LVR)

1.99% p.a.

Variable for 12 months, then 2.488% p.a. variable)



(Owner occupier, principal & interest)

1.95% p.a.

(fixed 3 years)


Get a Variable Loan for Your Home

(Owner occupier, principal & interest, <60% LVR)

2.19% p.a.


Virgin Money

Special Offer for me: Fixed Rate Home Loan

(Owner occupier, LVR <80%, 300K+)

2.04% p.a.

(fixed 2 years)


Basic Home Loan

(Fixed, owner occupier, principal & interest, LVR 70% to 80%)

2.19% p.a.

(fixed 3 years)


Special Offer on Fixed Home Loans

(Owner occupier, principal & interest, <80% LVR)

1.89% p.a.

(fixed 2 years)

Goulburn Murray Credit Union

Special Offer Plus: Basic Variables

(Owner occupier, principal & interest)

2.33% p.a.

Variable for 24 Months, then 3.82%/annum variable


UHomeLoan Discount Coupon

(Owner occupier, principal & interest)

2.34% p.a.


Newcastle Permanent

Special Home Loan Deal

(Owner occupier, principal & interest)

2.59% p.a.



Fixed Rate Home Loan

(Owner occupier, principal & interest, LVR <80%)

1.88% p.a.

(fixed 2 years)


Liberate Variable Home Loan

(Owner occupier, principal & interest, 70% to 80% LVR)


2.29% p.a.



Back to basics Special

(Owner occupier, principal & interest, LVR<80%)

2.54% p.a.


Smart Home Loan 80

(Owner occupier, principal & interest)

2.48% p.a.



Variable home loans available

(Owner occupier, principal & interest)

2.55% p.a.



Variable home loans special

(Owner occupier, principal & interest, LVR <70%)

2.09% p.a.


Bank of Queensland

Economy Variable Home Loan

(Owner occupier, principal & interest, <70% LVR)

2.59% p.a.


Step 5: Examine your costs

A mortgage refinance can be expensive, just like when you apply to buy a home. You should weigh the savings and expenses you may incur before refinancing. These are additional costs that you may face if your loan is refinanced.

  • Application fee for the new loan
  • Settlement fee to settle existing mortgage
  • Valuation fee
  • By paying a disbursement fee, you can get rid of your mortgage
  • Breaking a fixed-term contract requires a break fee
  • Register for a mortgage to receive a loan
  • Stamp duty
  • Lenders offer mortgage insurance, or LMI.

Step 6 – Apply for the loan

Before you submit your loan application, it is important that you carefully review the rates provided by your lender. It is important to review both the loan offer and the fees. Now is the time to submit an application.

Step 7: Have your property valued

The new lender will need to approve your refinance application within a few days or several weeks. During this time, the lender will perform a valuation on your property. Your loan terms may be changed if your property’s value is higher or lower than the lender estimates. You should carefully review the updated loan estimate.

Step 8: Secure it

After you have agreed on the refinance rate, it is time for your lender to be locked in. Locking in your lender will ensure that the rate does not change before you close your home loan. You can also set your rate to float. If interest rates drop prior to you closing the loan, this strategy will work in your favor. If not, you might end up paying even more.

Step 9: Submit all required paperwork

Refinancing your mortgage requires a lot of paperwork. Here’s a list of the documents you will need to prepare to refinance your home loan.

  • Driver’s license or passport
  • Pay stubs serve as proof of income.
  • Tax Returns
  • Recent credit reports
  • Policy for homeowner’s coverage
  • Statement of assets, including stocks, bonds and savings accounts, as well as retirement accounts
  • Statement of Debt, including any existing car or mortgage loans

Once you have completed the necessary paperwork, the new loan should be ready for the lender’s approval. Once you have submitted all paperwork, the lender will request that you sign the final disclosure form. After you sign the closing disclosure, you will receive your loan documents that you will need to confirm. You should carefully read each document before you sign.

Step 10 – Pay the loan off

After your loan approval has been granted you will be able to work with your new lender to settle your home loan with the provider of the loan and establish your loan. This involves exchange of titles and the bank’s registration of the mortgage over your property.

Now your new loan is ready. Your lender will send you information about how to manage the loan and details for your new account. Usually, this happens within one working week.