Mortgage Refinance

A mortgage refinance is the process of accessing a new home loan to replace an existing one. There are numerous situations why a refinance may make sense:

  • Lower your interest rate
  • Lower monthly repayments
  • Pay down debt or the home faster
  • Unlock equity for various needs

Finding The Best Loan

Start with your current lender and compare against the market.

New Loan Considerations

Compare Rate & Fees – Check Terms – Check Company Reviews & Licence

Qualifying Considerations

Credit History/Score – Proof of Income – Debt to Income Ratio

How it works

What exactly is a Mortgage Refinance?

Refinancing your home loan is simply changing your current loan for a new one with your bank or a new lender.

Popular reasons for refinancing include debt consolidation, cash out for renovations or other purchases and rate reduction to save on interest.

For the purposes of debt consolidation there are numerous things to consider in order to ensure refinancing is beneficial to you.


When does refinancing makes sense?

Below are reasons to consider a mortgage refinance for debt consolidation:

  • You make one monthly payment for all of your debts
  • Reduce your overall monthly repayments, improving cash flow
  • Potentially reduce the amount of interest you pay
  • A better rate can help pay off your home and debts quicker

What are the drawbacks?

A mortgage refinance isn’t right for everyone. There is a qualification process for borrowing and the risks include:

  • The possibility of increased debt. By freeing up credit, there can be the temptation to spend again
  • Prolonged debt period. In certain instances repayments may be lower but terms extended. This may also impact amount of interest being paid back
  • Those that refinance to consolidate debt are putting their home at risk
  • Not everyone qualifies for finance
  • Consolidation does not eliminate debt, it restructures it
  • Initial interest rate of the finance may increase over time (variable rate loans)
  • There are costs which may include different types of fees, and Lender Mortgage Insurance if the loan is over 80% of the purchase price

General Refinance Considerations

Debts that can be included

When refinancing for debt consolidation, most types of debts can be paid off. Examples include:

  • Credit/Store Cards
  • Car Loans
  • Personal Loans
  • Personal Overdrafts
  • Medical Fees
  • Outstanding Bills (utility, phone, etc)
  • Fines
  • ATO Debts, etc.

Other debt consolidation solutions such as balance transfers, are primarily for credit and store cards.

Do I qualify for a mortgage refinance?

General qualification criteria are the same as the original loan:

  • Must be 18 years of age
  • Must be an Australian citizen or resident
  • Have a good credit history
  • Proof of income (employed or self employed)
  • Good financial standing (ability to service finance)
  • Equity in the home

Each credit provider or lender will have its own approval process and criteria. The above highlight the minimum requirements most lenders require.

Refinancing For Debt Relief Example

Current Debts & Monthly Repayments


Mortgage $350,000 $1,889
Credit Card $5,000 $125
Car Loan $10,000 $250
Personal Loan $8,000 $188
Store Card $5,000 $137
Payday Loan $1,500 $226
Medical Bill $8,000 $180
Total Owed $387,500 $2,995

Consolidated Payment





A consolidation loan of $390,000 with a interest rate of 3.5% over 30 years would change the total monthly repayment of $2,995 to $1,761.

A difference of $1,234 a month or $14,808 a year.


Need some help?

Can I refinance if I have bad credit?

Depending on the lender it may be possible to refinance your home loan whilst having poor credit. However the rate provided may not be beneficial, as rates attached to impaired credit tend to be higher.

If considering a new loan, make sure there is a real short and long term benefit to you.

Is it worth it to refinance?

The motivation behind refinancing is different for each person/family. General benefits of refinancing a home loan include:

  • Reducing your interest rate
  • Reducing your monthly repayment
  • Saving money on interest repayments
  • Accessing different features of a new loan
  • Possibly reducing the length of the loan
  • Accessing equity for debt reduction, renovation or other financial needs

See our section on “How It Works” to see drawbacks.

How much can i refinance?

The amount you can refinance will depend on the amount of equity you have built up in your home, and in relationto a lender’s max Loan to Value Ratio (LVR).

As an example, if a lender has a max LVR of 95%, then they will only let you borrow up to 95% of your home’s value.

Are there other options to accessing my home equity if I don't want to refinance?

There are other options to access your home equity if your are uncomfortable with refinancing. In some instances, people with offset accounts utilise this feature to access cash.

Other options can include a home equity line of credit or home equity loan.

Best home loan refinance deals

Finding the best refinance deal is dependent upon what is available in the market at the time. Your particular financial situation also influences your options.

A common savings tactic used by many is to review the market via comparison sites or broker sites for deals relevant to their situation, then using that information to negotiate a better deal with their existing lender.

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