3 June 2026 * 5-minute read

Refinancing a home loan could be a smart way to help you reach your financial goals, but timing is everything. Knowing when to refinance is just as important as knowing why you should.

Whether you’re looking to secure a lower interest rate, reduce your monthly interest repayments, access equity for renovations or investment, or consolidate debt, refinancing could be a good option. However, factors such as your loan type, fixed-rate terms, property value, credit position, and current market conditions all play a role in determining your eligibility and the ideal time to refinance.

This Q&A article is designed to help you decide when it might be the right time to review your existing home loan and potentially, to refinance.

Key take-outs

• Be clear in your mind about why you want to refinance
• Research the market, interest rates, and special offers
• Calculate your borrowing power
• Be aware of the costs of refinancing
• Talk to your current lender before committing yourself elsewhere.

Considerations and questions

• When might be the right time to refinance a home loan?
• How long have you had your current home loan?
• What's happening with interest rates?
• Is there a special offer or incentive in the market?
• What's happening in your life?
• What's happening in the property market?
• Are you selling and then buying another property?
• What refinancing costs do you need to allow for?
• Why is your current financial situation important?
• What’s your borrowing power if you want to borrow more?
• How often can you refinance a home loan?
• Will multiple refinance applications affect your credit score?
• Why should you talk to your current lender first?
• How often should you review your mortgage?

When might be the right time to refinance a home loan?

If you're considering refinancing a mortgage, the two main reasons may be necessity (you need funds for something), and/or a belief that you can save money with a more competitive interest rate.

Perhaps you want to finance home improvements, buy an investment property, buy a new car or boat, invest in solar, or you're interested in debt consolidation.

Whatever your reasons for switching loans, there are several questions to ask about your existing loan, the new loan you'd like to switch to, and timing.

How long have you had your current home loan?

This is important. If you've had a loan for less than 12 months, refinancing may not add up numbers-wise, as the costs associated with refinancing could outweigh the benefits of a lower interest rate.

Look out for application and discharge fees, property valuation fees, mortgage registration fees, search title fees, break costs and other fees, or you may potentially have to pay for Lenders Mortgage Insurance.

A good starting point could be our refinance calculator.

What's happening with interest rates?

If the Reserve Bank indicates that interest rates for home loans are going down, it may be time to see if other lenders are advertising a better interest rate than your current rate. Or, if rates are predicted to go up, you may want to consider locking in a fixed rate before the potential interest rate hike.

Either way, it's wise to approach your existing lender first. They can't give you advice or credit assistance, but they may help by renegotiating a lower interest rate to keep your business.

See Westpac featured interest rates, then chat with a Westpac loan specialist.

Is there a special offer or incentive in the market?

To be competitive, many lenders will offer special incentives or bonuses – such as introductory rates for a fixed rate period. Many of these offers have time limits and are dependent on what's happening in the home loan market, so consider taking advantage of them before they close.

Make sure you weigh up all the pros and the cons and look online at the comparison rates too, as they give you the actual cost of the home loan including ongoing fees and the interest rate.

What's happening in your life?

Major life events can impact your financial position, homeownership and investment property goals. Events such as births and deaths, marriages and separation, job promotion or loss, can be the catalysts for change.

Reviewing your home loan periodically and asking your lender for a ‘Home Loan Health Check' means you may be able to plan for any significant changes in your situation.

What's happening in the property market?

The value of the property you're mortgaging also impacts whether you can refinance your home loan. If the property value has risen and your equity has gone up, refinancing shouldn't be an issue. However, if the value of your property has decreased and the loan to value ratio (LVR) has increased, you could find it difficult to refinance at a comparable loan amount.

Even if you can afford the loan amount and loan repayments on your existing loan, a new lender will want at least an 80% LVR or require you to pay for LMI (Lenders Mortgage Insurance).

Are you selling and then buying another property?

If you're selling your current property and are thinking of buying a new home, it may be a good time to look at refinancing your home loan. With some lenders, you can't avoid this, but if your home loan has a portability feature, you could keep your current loan and save all the extra paperwork and costs associated with refinancing and a new loan.

With portability, you substitute the property securing your loan with another, which is particularly important if you have a fixed rate mortgage. Using your loan's portability feature means you'll not incur break fees. Learn more about portability.

What refinancing costs do you need to allow for?

There are many variables at play when you consider the type of loan (fixed rate loan or variable loan), interest and comparison rate, offers, and features offered by lenders. Before you even contact a lender, you need to look at what's involved in closing out your current mortgage, as that's where you could get unstuck.

Closing costs that could impact your switch to a new lender may include:

• Early exit fees (these can be costly if you refinance before a specified period)
• Fixed rate home loan break costs (if your current fixed period has yet to expire)
• Discharge or settlement fees.

Why is your current financial situation important?

When you approach a lender or credit provider for a new home loan, they'll want to assess your ability to repay the loan. That means you'll need to provide details of your personal and financial situation, proof of income, pay slips and other information to meet their lending criteria. Each lender will have its own needs, but in general, they will look for the '3 Ps':

• Purpose - Do you want a longer loan term? Are you looking for a mortgage with more loan features? Or is there another reason you want to refinance?
• Person - Who are you, and what's your credit rating? Do you have car loans, personal loans, or multiple debts? Are you already a customer of the lender?
• Payback - How will you afford to make the mortgage repayments? Are you looking to make extra repayments to pay back your loan sooner? What's your equity?

What’s your borrowing power if you want to borrow more?

Knowing how much you could potentially borrow in your current financial and personal situation is essential. Your ability to borrow more against your property will depend on the current value of your property, the loan to value ratio (LVR), and your ability to make repayments.

Westpac has handy home loan calculators to help you estimate how much you could borrow as well as what your monthly repayments might be:

• Borrowing power calculator
• Repayment calculator
• Other calculators

How often can you refinance a home loan?

You can refinance your home loan at any time after settlement and there's no rule that says you can't refinance more than once a year. But it may not be the most practical thing to do, especially if you consider refinancing costs.

Holding on for at least two years may help you build equity and recover upfront costs. However, if you have a good reason to refinance, or you have no choice and need to sell your property quickly, it can be done.

Be particularly careful if your current home loan is on a fixed interest rate as you could be up for break costs.

Will multiple refinance applications affect your credit score?

Yes, they might, especially if you're applying to multiple lenders in a short period of time. If you're refinancing within the same year, avoid applying to several lenders. Do your homework and decide which lender you'll use or approach a local broker.

It's also worth remembering that refinancing too frequently could raise red flags with lenders.

Why should you talk to your current lender first?

Before considering refinancing, it's a good idea to talk to your current lender or mortgage broker first. They may be able to meet your expectations through your current loan without having to refinance, which will mean your credit score stays intact.

Using the same lender may also help you save on all the hassles and fees involved, which may include:

• Discharge or settlement fee
• Property valuation fee
• Mortgage registration fee
• Title search fee
• Exit fees or break costs
• Application fees
• Lenders Mortgage Insurance

How often should you review your mortgage?

No matter what you decide to do, your lender should encourage you to review your home loan regularly, either when there's a change in circumstances, interest rate, or market trends, or if you haven't reviewed your home loan in over 12 months. A good rule of thumb is to review your mortgage every year.

Remember, a good home loan should have the features and flexibility to change with your own ever-changing needs.