Refinancing & Restructuring
A refinance is a fresh loan application, not a rate tweak. Here is what actually gets assessed, what it costs, and how to tell whether moving leaves you better off.
Refinancing Is a Decision, Not a Default
Most home loans are set up once and then left alone. That is understandable — but a structure built around your situation five years ago is unlikely to be the right one for the situation you are in now. Incomes change, families grow, a home becomes an investment, debts get consolidated or paid off.
Refinancing is how you correct that. It is not automatically worth doing, and a broker who tells you it always is has stopped paying attention. What follows is what we look at before forming a view.
- Whether the total cost of moving is recovered in a reasonable period
- Whether your current structure separates personal and investment debt cleanly
- Whether an offset would do more for you than a lower headline rate
- Whether your equity position has moved enough to remove Lenders Mortgage Insurance
- Whether fixing, splitting or staying fully variable suits what you have planned
- Whether staying with your current lender and repricing is the simpler answer
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What Moving Actually Costs
The saving from a lower rate is easy to picture. The costs that offset it are less visible, and they are where refinances quietly stop making sense. Before we recommend a move, we price all of them.
- Break costs — if any part of your loan is fixed, exiting early can carry an economic cost calculated by the lender. On a large fixed portion this is frequently the figure that decides it.
- Discharge and settlement fees from the outgoing lender, plus government registration charges.
- New application, valuation and settlement fees, though these are often waived or rebated.
- Lenders Mortgage Insurance, a second time — LMI is not portable between lenders. Refinancing while still below the equity threshold can mean paying a fresh premium on a policy that protects the lender, not you.
- The reset loan term — moving a loan with 22 years left onto a fresh 30-year term lowers the repayment and raises the total interest paid. Worth doing deliberately, not by accident.
We put the recovery period in writing. If the costs take an unreasonable time to earn back, that is the recommendation we give you — including when the recommendation is to leave it alone.
A Refinance Is a Full Application
This surprises people who have held a loan for years without incident. You are not editing an existing arrangement — you are applying to a new lender who has never seen you before, against today's criteria rather than the ones that applied when you first borrowed.
- Income, assessed on current evidence. Self-employed, recently changed jobs, on probation, or a bonus-heavy package — each is treated differently, and lenders differ from each other on all of them.
- Living expenses, tested against a benchmark and against your actual statements.
- Credit facilities by limit, not balance. An unused card with a high limit reduces borrowing power as though it were drawn.
- Repayments tested at a buffer above the actual rate, so the loan you comfortably service today may still assess tighter than you expect.
- The property itself. A valuation below what you assumed changes your equity position and can change the whole plan.
None of this is a reason to avoid refinancing. It is a reason to have the position checked before an application is lodged, rather than collecting a decline that sits on your credit file.
Where the Lasting Value Usually Is
Rate is the visible part. Structure is the part that is still working for you — or against you — in ten years.
The most common structural problem we see is a loan where personal and investment borrowing have been blended into one balance. Once mixed, apportioning interest is awkward for as long as the loan exists. A refinance is the natural moment to separate them.
The second is redraw used where an offset was needed. Both reduce interest; only one keeps the money yours. If a property might ever be rented out, that distinction has real consequences — our guide to offset versus redraw works through why.
- Splitting investment debt from owner-occupied debt
- Offset placement across multiple splits
- Fixed, variable or part-fixed, matched to what you have planned
- Consolidating higher-cost debt — with the term consequences stated plainly
- Releasing usable equity for renovation or a deposit
Tax treatment is your accountant's call, not ours. The structure that makes their advice possible is ours, and the two are worth coordinating before settlement rather than after.
The Process, Step by Step
- Position reviewWe look at your current loan, rate, structure, equity and goals, and form a view on whether a move is worth pricing.
- Costed comparisonOptions across our lender panel, with the full cost of moving and the recovery period shown, not just the rate.
- ApplicationOne properly prepared application to one chosen lender, rather than several speculative ones that mark your credit file.
- Valuation and approvalThe lender values the property and assesses the file. We manage conditions as they come back.
- SettlementThe new lender pays out the old one and the loan transfers. Your repayments start on the new structure.
What to have ready
- Recent payslips, or two years of tax returns and financials if self-employed
- Your most recent home loan statements
- Statements for any other debts — cards, personal loans, car finance
- Photo identification
- Rental statements or a lease if the property is tenanted
Not all of it is needed on day one. We will tell you what matters first so you are not gathering paperwork you do not need yet.
Common Questions
How do I know if refinancing is worth it?
Add up every cost of moving — break costs, discharge and registration fees, any new application fees, and a second LMI premium if you are still below the equity threshold — then work out how long the saving takes to recover it. If that period is unreasonably long, staying put is the better answer, and we will say so.
Will refinancing hurt my credit score?
A refinance involves a credit enquiry, which is normal and expected. What causes damage is several applications lodged across different lenders in a short period. We assess your position first and lodge one prepared application, rather than testing the market with your credit file.
Can I release equity when I refinance?
Often, yes. Refinancing is a natural point to access usable equity for a renovation, an investment deposit or consolidating debt. How much is available depends on the valuation, your equity position and whether the new borrowing can be serviced. The purpose of the funds also matters — it affects how the interest is treated, which is worth discussing with your accountant.
Do I have to refinance to get a better deal?
No, and sometimes you should not. Asking your current lender to reprice is faster, costs nothing and involves no new application. It is generally worth trying before moving. Where repricing does not get you far enough, or the structure is the problem rather than the rate, a refinance does what repricing cannot.
What happens to my offset account when I refinance?
Offset arrangements do not transfer between lenders — the new loan has its own. The money is yours and moves with you, but the structure has to be set up deliberately on the new loan. Where a loan is being split, where the offset sits across those splits matters and is worth planning rather than accepting a default.
Will I have to pay LMI again?
Only if your equity is still below the threshold at which the new lender requires it. LMI is not portable, so a premium paid to your current lender does not carry across. If you are close to the threshold, the valuation becomes the deciding factor and is worth establishing before you commit to moving.
How long does refinancing take?
It varies with the lender, the complexity of your income and how quickly the valuation comes back. A straightforward salaried refinance typically moves faster than a self-employed one with several entities. We give you a realistic estimate at the outset rather than an optimistic one.
Guides on This Topic
- When is it actually worth refinancing?
- Offset vs redraw: what's actually different
- How much can I borrow? What lenders assess
These go deeper than a service page reasonably can. All general information only — and none of it takes your particular circumstances into account.
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General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here. Sabea Financial, Credit Representative 539 662, ABN 86 653 823 253, is authorised under Australian Credit Licence 391237.