2025 Market Snapshot: Why It’s a Smart Time to Refinance
Here’s what’s changing in Australia’s property and finance landscape in 2025—context that makes refinancing or switching home loans especially meaningful right now:
- RBA rate cuts are rolling in: The Reserve Bank of Australia cut the official cash rate twice—first to 3.85% in May, and again in August to 3.60%. Further cuts are expected, with markets eyeing levels as low as 3.35% by year-end. :contentReference[oaicite:1]{index=1}
- Big banks are passing on savings fast: Commonwealth Bank, for instance, dropped fixed and variable rates by up to 0.45 ppt. Borrowers with $600,000 mortgages could save over $270 per month. :contentReference[oaicite:2]{index=2}
- Refinancing is booming: External refinancing (i.e., switching banks) surged in Q1 2025, reaching record levels not seen since 2023. :contentReference[oaicite:3]{index=3}
- Home loan demand is strong: FY 2025 saw 544,630 new property-backed loans settled—up 6.8% from the previous year. :contentReference[oaicite:4]{index=4}
These are timely developments that borrowers can—and should—leverage to potentially secure lower rates, better features, or cashback when considering a mortgage switch in 2025.
Considering a home loan switch? Speak with a mortgage broker in Coffs Harbour to compare lenders.
Have you considered refinancing or switching home loans to manage your monthly repayments better? You’re not alone. According to the Australian Banking Association (ABA), 2370 Aussie homeowners refinance their home loans every working day, and 70% of them are switching their mortgage to another bank.
Refinancing your home loan for a lower interest rate might save you money. However, before you decide to switch, it’s essential to ensure the benefits outweigh the costs. While many homeowners focus on getting a better interest rate, there are various factors to consider before making a decision on whether or not to transfer your home loan to another bank.
In this guide, we’ll explore the key considerations and steps involved in changing home loans. From identifying your purpose for refinancing and understanding your financial situation to negotiating with your current lender and comparing new loan options, Q Financial will cover everything you need to know to navigate the refinancing process effectively.
What Does a Mortgage Transfer Mean?
A mortgage transfer simply means moving your existing home loan from one bank to another. In practice, this is the same as refinancing. Some lenders call it “moving your home loan” or a “loan transfer.” It involves a discharge of your old mortgage and setup of the new one, often with fees and valuations.
How to Switch Mortgage to Another Bank
Switching your mortgage to another bank is essentially a form of refinancing. The process involves your new lender paying out your old loan and setting up a new mortgage contract under their terms. It usually includes:
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Comparing lenders and products.
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Submitting a refinance application.
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Property valuation and credit checks.
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Loan settlement and discharge of the old mortgage.
Most Australians switch banks to access lower rates, cashback offers, or better features like offset accounts. While the process is straightforward, it’s important to weigh potential savings against exit fees, application costs, and LMI.
What Are the Common Reasons for Refinancing?
- Lower Interest Rates: Refinancing to a mortgage with a lower interest rate can save you money on your monthly repayments and reduce the total interest paid over the life of the loan.
- Better Loan Terms: Switching to a new loan can offer more favourable terms, such as changing from a fixed rate to a variable rate loan or vice versa. This flexibility lets you choose loan terms that are better aligned with your financial goals and market conditions.
- Access to Additional Features: Many homeowners switch home loans to access additional loan features – such as flexible repayment options – that their current mortgage may not offer.
- Better Lender: Poor customer service or unfavourable loan conditions with your current lender can prompt you to seek better options. Changing to a mortgage lender with a better reputation for customer service and more competitive loan products can improve your overall borrowing experience.
- Changing Financial Circumstances: Refinancing can help you adjust your mortgage to better match your new financial needs during life events such as marriage, having children, or retirement.
- Debt Consolidation: Switching home loans can be done to consolidate debts with high interest, such as personal loans or credit cards, into just one loan: your home loan. This can make it easier for you to manage your debts.
What Do I Need to Consider Before I Refinance My Home Loan?
Financial Situation
- Income and Expenses: Evaluate your current earnings and expenses to see if you can manage your monthly mortgage repayments. Consider any future changes to your income or expenses that could affect your capacity to pay off the loan.
- Future Financial Goals: Reflect on your long-term financial goals, such as funding your children’s education, saving for retirement, or making significant investments. Ensure that refinancing aligns with these goals and helps you achieve them.
Credit Score
- Impact on Refinancing Terms: Your credit score influences the interest rate and terms you qualify for when refinancing. A higher credit score can help you secure lower interest rates and better loan terms. On the other hand, a lower score may limit your options. Therefore, it’s crucial to check your credit score and improve it if necessary before applying for a new loan.
Loan-to-Value Ratio (LVR)
- Significance and Implications: The Loan-to-Value Ratio (LVR) is the percentage of your property’s value that you owe on your home loan. Lenders typically prefer an LVR of 80% or lower, as this reduces their risk. If your LVR is above 80%, you may need to pay Lenders Mortgage Insurance (LMI), which can increase the cost of changing home loans.
Current Loan Terms and Features
- Fixed Rate Terms: If your current loan has a fixed interest rate, check when the fixed term ends. Refinancing before the end of the fixed term may incur break fees, which can add to the cost of switching loans.
- Repayment Options: Consider whether your current loan allows you to make extra repayments or switch between different repayment frequencies (e.g., weekly, fortnightly, monthly). Flexible repayment options can help you handle your mortgage more effectively and reduce interest costs over time.
- Loan Features: Evaluate the features of your current loan, such as redraw facilities and offset accounts. These features can provide additional flexibility and opportunities to save money. When comparing new loan options, ensure that the new loan offers similar or better features to meet your needs.
Changing Home Loans – What You Need to Know
Changing your home loan doesn’t always mean moving to a different lender. Sometimes, your current bank can adjust your loan terms — for example, moving from a fixed rate to variable, extending the term, or restructuring repayments.
For many borrowers, however, the best outcomes come from comparing offers across multiple lenders. Changing loans allows you to:
Reduce your interest rate.
Access features like redraw or offset.
Consolidate debt.
Adjust your loan term to suit life changes.
Whether you stay with your current bank or change lenders, the principle is the same: aligning your mortgage structure with your financial goals.
Switching Home Loans as a Teacher
Professionals in education often benefit from tailored lending policies that can make refinancing easier. For example, teachers may qualify for lower deposit requirements or discounted rates with certain lenders. If you’re in the education sector, explore our guide on home loans for teachers to see how switching could work to your advantage.
Changing Loans With the Same Bank
Many borrowers overlook this option. Your current bank may be willing to restructure your mortgage to keep your business. This could involve:
Switching from a fixed rate to a variable rate loan (or vice versa).
Shortening or extending your loan term to match changes in your finances.
Adding features like an offset account or redraw facility.
Consolidating personal loans or credit cards into your mortgage.
💡 Tip: Before you switch mortgage to another bank, always ask your current lender if they can match or beat competitor offers. Sometimes a single phone call can save thousands.
Changing Loans by Switching Banks
When you refinance with a new lender, the process involves:
Application & Pre-Approval – You apply for the new loan with the bank of your choice.
Valuation & Assessment – The new lender checks your property’s value and assesses your income, expenses, and credit history.
Settlement – The new lender pays out your existing loan and takes over as your mortgage provider.
Benefits of changing lenders often include:
Lower interest rates (which could reduce repayments significantly).
Cashback offers (some banks offer up to $6,000 for refinancers).
Access to features your old loan didn’t have.
However, costs may include discharge fees, application fees, or LMI if your equity is below 20%.
Key Questions to Ask Before Changing Your Home Loan
Will the savings from a lower rate outweigh the costs of refinancing?
Am I happy with my current lender’s service and digital tools?
Does the new loan offer flexibility (extra repayments, offset, portability)?
How will switching impact my long-term financial goals (e.g., paying off the loan sooner vs. lowering repayments)?
When Changing Home Loans Makes the Most Sense
You’ve built up at least 20% equity (avoiding extra LMI).
Interest rates have dropped or competitors are offering better deals.
You want features your current loan doesn’t provide.
Your financial situation has changed (new job, family, retirement planning).
You want to consolidate debts into one lower-interest loan.
Refinancing Benefits for Doctors
Medical professionals also have unique refinancing opportunities. Many banks offer doctors the ability to refinance with higher loan-to-value ratios (LVR) without paying Lenders Mortgage Insurance (LMI). If you’re a health professional, see how these benefits apply by visiting our page on home loans for doctors.
Is a Home Loan Switch Worth It in 2025?
Yes, in many cases switching your mortgage in 2025 is worthwhile. With banks competing heavily for refinance customers, cashback offers up to $6,000 and sharper rates are common. That said, the benefits depend on your equity, credit score, and how long you plan to hold the loan. If the costs of switching outweigh the long-term savings, it may be better to negotiate with your current lender instead.
What’s the Difference Between Switching and Refinancing?
The terms are often used interchangeably, but there’s a subtle difference:
Refinancing: Any time you change the structure of your mortgage (even with the same lender).
Switching: Specifically means moving your home loan from one bank to another.
Both options can save you money or unlock features, but refinancing with the same lender may involve fewer fees and less paperwork. Switching lenders may deliver bigger savings but usually takes longer and requires more documentation.
Should I Switch My Mortgage to Another Bank, or Should I Stay With My Current Lender?
Interest Rates
- Lower Rates with a New Lender: Switching your home loan to another bank could offer a lower interest rate.
- Negotiating with Your Current Lender: Sometimes, simply informing your current lender of your intention to switch can result in them offering a better rate to keep your business. This can save you from the hassle of switching while still enjoying financial benefits.
Fees and Costs
- Refinancing Costs: Changing your mortgage lender involves various costs, such as application, discharge, and potential break fees if you’re on a fixed rate loan. Make sure to fully understand all the costs involved, including hidden charges.
- LMI: If you have less than 20% equity in your home, switching lenders may require you to pay LMI again, which can significantly increase the overall cost.
Loan Features and Terms
- Additional Features: New lenders might offer better features like offset accounts, redraw facilities, or more flexible repayment options.
- Loan Term: Be cautious about extending your loan term with a new lender. While a longer term can reduce monthly repayments, it often results in paying more interest over the life of the loan.
Market Conditions
- Competitive Market: The current market may have more competitive offers due to low interest rates and banks vying for new customers switching home loans. This competition can result in favourable terms and incentives, such as cashback offers.
- Future Rate Changes: Consider potential interest rate changes and how they might affect your repayments. Locking in a lower rate now might be beneficial if rates are expected to rise.
Customer Service
- Service Quality: If you’re unhappy with the service from your current lender, switching to a lender with a better reputation for customer service might improve your overall experience.
- Support and Communication: Transferring your home loan to a lender with good customer service can make managing your mortgage easier and provide peace of mind, especially during times of financial uncertainty.
Cost-Benefit Analysis
- Potential Savings: Use a mortgage switching calculator to estimate how much you could save by refinancing after accounting for all fees and costs. Ensure that the savings outweigh the expenses involved in switching.
- Break-even Point: Determine how long it will take to recover the costs of switching through savings on your new loan. If the break-even point is too far in the future, it might not be worth switching.
How Do I Negotiate with My Current Lender?
Requesting Better Terms
- Prepare Your Case: Before contacting your lender, gather information about your current financial position, including your income and expenses, present interest rate and loan terms, and any changes in your financial goals.
- Do Your Research: Research the interest rates and loan features offered by other lenders. This gives you a benchmark to use during your negotiations and demonstrates that you are informed about the market.
- Initiate Contact: Reach out to your lender and inform them that you are considering switching to another lender due to better offers available in the market. Be clear about what you seek, whether it’s a lower interest rate, reduced fees, or additional features.
Leverage
- Use Your Equity: If you have significant equity in your home (at least 20%), use this as leverage. More equity typically makes you a lower-risk borrower, which can encourage your current lender to offer better terms to retain your business.
- Highlight Your Credit Score: A good credit score can be a powerful bargaining tool when switching home loans. Lenders are more likely to offer you favourable terms if you have a high credit score, as it indicates you’re a low-risk borrower. Ensure your credit report is accurate and updated before negotiating.
- Show Competitor Offers: Present the offers you have received from other lenders. Showing concrete examples of better rates or terms can motivate your current lender to match or beat those offers to keep you as a customer.
Potential Outcomes
- Improved Terms: If your lender offers better terms, review them carefully. Ensure they align with your financial goals and provide your desired benefits. If the offer is satisfactory, you can avoid the hassle and costs associated with switching lenders.
- No Change: If your lender does not offer improved terms, you must decide if it’s worth switching to another lender. Carefully consider the potential savings, costs involved in switching, and whether the new terms from another lender are significantly better.
- Re-evaluation: Sometimes, the negotiation process can serve as an opportunity to re-evaluate your financial situation and goals. Even if the lender’s new offer is not significantly better, it might still provide enough benefits to make staying worthwhile.
How Do I Compare Lenders?
Using Comparison Websites
- Benefits: Comparison websites offer convenience by allowing you to quickly compare interest rates, fees, and features from multiple lenders in one place. They also provide a comprehensive view of the market, highlighting various loan options you might not have considered.
- Disadvantages: These websites are businesses and may earn commissions from lenders featured on their sites, which means their rankings and recommendations may be biased. In addition, comparison websites may have incomplete listings, as not all lenders participate in comparison websites – this means you might miss out on some potentially better offers.
- What to Watch Out For: Check for transparency – see how the website ranks lenders and whether they disclose any relationships with the lenders. In addition, ensure the information is accurate and up-to-date by cross-referencing with lenders’ official websites.
Consulting Mortgage Brokers
- Benefits: Benefits: As experts, mortgage brokers have in-depth knowledge of the market and can offer personalised advice on switching mortgages based on your financial situation. Brokers can also access a wide variety of loan options from different lenders, increasing your chances of finding the best deal.
- Disadvantages: While brokers are legally required to act in the client’s best interests, some of them may favour lenders who offer higher commissions – which might not always align with your best interests. In addition, some brokers work with a limited panel of lenders, so you might not get a full view of the market.
- How to Choose a Broker: Ensure your broker is accredited and has a good reputation. Moreover, ask how the brokers are compensated and whether they disclose all available options.
Key Features to Compare
- Interest Rates:
- Fixed vs. Variable Interest: Understand the differences between fixed rate and variable rate and choose one that suits your financial stability and goals.
- Comparison Rate: Look at the comparison rate, which includes both the interest rate and fees, to get a better idea of the true cost of the loan.
- Fees:
- Upfront Fees: Consider application fees, valuation fees, and any other initial charges.
- Ongoing Fees: Check for monthly or annual service fees that could increase the loan’s overall cost.
- Discharge Fees: Be aware of any fees for exiting your current loan early.
- Loan Terms:
- Loan Duration: Compare the loan terms offered by different lenders. While longer terms might mean lower monthly payments, they might also higher overall interest.
- Flexibility: Look for options that allow you to make extra repayments without penalties. Check for additional features as well, such as redraw facilities and offset accounts. Furthermore, check if the lender offers flexible repayment schedules so you can better manage your cash flow.
What Are the Steps to Switching Home Loans?
Once you’re done determining what you’re looking for in a new loan, researching and comparing your loan options, choosing your lender, and assessing the costs and fees involved, you can proceed to refinance your home loan. Here are the steps to transition from your current home loan to a new one that better suits your financial needs and goals:
Step 1. Check Eligibility Criteria and Loan Requirements
- Credit Score: Make sure you have a good credit score.
- Income and Employment: Confirm that your income and employment status meet the new lender’s requirements.
- LVR: Ensure your LVR is acceptable to the new lender. Typically, a lower LVR results in better loan terms.
Step 2. Prepare Necessary Documentation
- Identification: Provide proof of your identity, such as a driver’s licence or passport.
- Income Verification: Gather recent pay slips, tax returns, and employment details.
- Property Details: Include property valuation reports and details about your current home loan.
- Expenses and Assets: Prepare statements showing your current expenses and assets, including bank statements and records of other loans or debts.
Step 3. Apply for the New Home Loan
- Refinancing Application: Fill out the application form with the new lender and submit your documents, ensuring all information is accurate and complete.
- Follow-Up: Stay in regular contact with the lender to address any queries or additional documentation requests promptly.
Step 4. Complete the Settlement Process
- Approval: Once your application is approved, carefully review the entire loan offer.
- Settlement Coordination: Work with your new lender, current lender, and any involved legal professionals to coordinate the settlement date. This involves ensuring all necessary paperwork is in place and that both lenders are aligned on the settlement process.
- Transfer of Funds: Ensure the new lender pays off your existing loan and transfers the mortgage to the new loan.
Step 5. Notify the Previous Lender and Transfer the Mortgage
- Formal Notification: Inform your current lender about the switch and confirm the discharge of your existing mortgage.
- Redirection of Payments: Set up any direct debits or automatic payments to your new loan account to avoid missing repayments.
- Follow-Up: Ensure all documentation is processed correctly and your new loan is set up according to the agreed terms.
How Do I Manage My Loan Features Post-Switch?
Managing your loan features effectively after switching home loans can help you maximise the benefits of your new mortgage. Here are some key features to consider and how to manage them:
Splitting Loans: Combining Fixed and Variable Rates
- Split Loan: A split loan lets you divide your mortgage into two portions – one with a fixed interest rate and the other with a variable rate. This can offer the best of both worlds: the stability of fixed rates and the flexibility of variable rates.
- Benefits:
- Fixed Rate Portion: This provides certainty in repayments, protecting you from interest rate rises.
- Variable Rate Portion: This allows you to take advantage of potential rate drops and offers features like offset accounts and redraw facilities.
- Considerations:
- Proportion Allocation: Decide how much of your loan you want to be fixed and how much you want to remain variable based on your financial goals and risk tolerance.
- Periodical Review: Regularly review your split loan arrangement to ensure it meets your needs as market conditions and your financial situation change.
Loan Portability: Keeping Loan Terms When Moving Properties
- Loan Portability: This feature lets you transfer your existing loan terms to a new property without needing to refinance.
- Benefits:
- Cost Savings: Loan portability lets you avoid discharge and application fees associated with closing and opening new loans.
- Convenience: Loan portability simplifies the process of moving to a new house by keeping your existing loan terms.
- Considerations:
- Eligibility: Check with your lender if your loan is portable and what conditions apply.
- Timing: Coordinate the sale of your current property and the purchase of the new one to ensure a smooth transition.
Additional Features: Using Redraw Facilities, Offset Accounts, and Repayment Holidays
- Redraw Facility: A redraw facility allows you to withdraw any extra repayments you’ve made on your loan, providing flexibility in accessing additional funds when needed.
- Benefits: Helps manage cash flow by giving you access to funds without taking out a new loan.
- Considerations: Be aware of any fees or limits on the number of redraws allowed.
- Offset Account: An offset account is a banking account linked to your home loan where the balance offsets the amount owed on your loan, reducing the interest payable.
- Benefits: It can significantly reduce the interest you pay over the life of the loan, potentially saving you thousands.
- Considerations: Ensure the benefits outweigh any fees associated with maintaining the offset account.
- Repayment Holiday: A repayment holiday is a feature that lets you temporarily pause or reduce your mortgage repayments, often used during times of financial hardship or significant life events.
- Benefits: A repayment holiday provides financial relief during challenging times without the need to switch mortgages or take out additional loans.
- Considerations: Understand the terms and conditions, including how interest will be calculated during the repayment holiday and what the impact will be on your overall loan term.
Additional Tips
Below are a few additional tips to help ensure that your decision aligns with your financial goals and is beneficial in the long term:
Following ASIC’s Advice
- Doing Your Homework: The Australian Securities and Investments Commission (ASIC) advises borrowers to thoroughly research and compare loan options.
- Seeking Transparency: Ensure all terms and conditions are transparent and that you understand them fully before switching home loans.
Final Thoughts
Ultimately, whether you choose to switch your mortgage or stay with your current lender, being well-informed and proactive will help you achieve better financial outcomes and greater peace of mind.
Switching home loans can be made even easier with the help of a professional mortgage broker. At Q Financial, we can assist you in comparing home refinance loan rates and with the necessary paperwork involved in switching lenders. Click the button below to book an appointment.
Article Updated in August 2025
| Feature | Switch Home Loan (New Bank/Lender) | Refinance with Same Lender |
|---|---|---|
| Process | New bank pays out your old mortgage and sets up a new one. Requires full application, valuation, and credit checks. | Simpler process – usually involves requesting a rate review or loan restructure. |
| Timeframe | 4–6 weeks (depending on lender and valuation). | 1–2 weeks (faster approval since you’re already a customer). |
| Interest Rates | Often lower due to competition between banks. Introductory rates or cashback offers common. | May be slightly higher, but negotiation can secure a discount without switching banks. |
| Loan Features | Access to new features like offset accounts, redraw facilities, or flexible repayments. | Can add/change some features, but options depend on your bank’s products. |
| Costs | Possible discharge fees, application fees, and LMI if equity is under 20%. | Lower upfront fees, but fewer cashback incentives. |
| Equity Requirement | Usually need at least 20% equity to avoid paying LMI again. | May allow refinancing with less equity (no need to re-pay LMI if already covered). |
| Customer Service | Potentially better if moving away from poor service. | If service is already good, staying can save hassle. |
| Best For | Borrowers chasing the lowest rate, new features, or better service. | Borrowers who want to save money quickly without major paperwork. |
Switching Home Loans: Frequently Asked Questions
Refinancing Basics
Yes. You can change your home loan by refinancing — either renegotiating with your current lender or moving to a new one. People refinance to get a lower rate, access features (offset/redraw), consolidate debt, or change terms to match new goals.
It can be, if the new loan reduces your costs or improves features. Always weigh savings against switching costs (discharge, application, potential break fees) and calculate your break-even point before you proceed.
Often — especially if another bank offers a meaningfully lower rate, better features, or a cashback that offsets costs. Run the numbers to confirm long-term savings, not just the headline offer.
Yes, you can refinance with the same bank, and it’s often called an internal refinance. This can mean switching from a fixed to a variable rate, extending or shortening your loan term, or negotiating a lower rate. The benefit is fewer fees and less paperwork than moving to another lender. However, banks don’t always give their best offers to existing customers, so it’s worth comparing with other lenders before making a decision.
Switching Lenders / Banks
Yes. Refinancing to another bank means the new lender pays out your existing loan and you begin repayments under new terms. Expect a credit assessment, property valuation, and standard settlement steps.
Yes — this is simply refinancing. You apply with the new lender, provide documents, and settle. Compare interest rates, fees, and features to ensure the switch is beneficial.
Absolutely. Many borrowers do this each week. The key is comparing the true cost (rate + fees) and ensuring the new loan structure suits your goals.
It’s straightforward, typically taking 4–6 weeks depending on the lender, valuation, and documents. A mortgage broker can streamline the process and negotiate on your behalf.
Loan Size & Repayments
It requires aggressive repayments. At ~6% interest, monthly repayments are roughly $7,700. Strategies: fortnightly payments, offset usage, expense cuts, extra income, and lump-sum contributions. This goal typically needs high income or windfalls.
It varies by rate, term, debts, and living costs. As a rough guide, lenders prefer repayments <~30% of gross income. For a $500k loan at ~6% over 30 years (~$3,000/month), many households need ~$90k–$100k+ gross income, subject to full assessment.
Yes, it’s possible to swap your mortgage to another bank without paying Lenders Mortgage Insurance (LMI), but only if you have at least 20% equity in your property. If your equity is below this threshold, most banks will require you to pay LMI again when you switch. This is why timing matters — waiting until you’ve built more equity can make switching more cost-effective.
