Category: Refinancing

With interest rates changing and fixed terms ending, refinancing your home loan in Australia could be one of the easiest ways to save money in 2025. You might be paying a very expensive loyalty tax unless you ask the question: Is this the best rate I can get?

For Melbourne homeowners, reviewing your mortgage might not only reduce monthly repayments but also free up funds for renovations, investment or debt consolidation. But switching loans comes with costs and considerations, so understanding the process is essential.

Why refinancing is worth considering in 2025

The Australian mortgage landscape has seen a lot of change recently – a series of interest rate hikes from 2022 to 2024 put pressure on many households. 

However, starting in February 2025, the Reserve Bank of Australia (RBA) has cut rates three times, taking the official cash rate down to 3.60% as of mid-September 2025.

For many Melbourne homeowners, this shift makes now a good time to review their mortgage.

Additionally, as the Australian Bureau of Statistics (ABS) graph below shows, there was significant growth in the number of people who took out fixed-rate home loans during the record-low interest rate period of 2020 to 2022. 

Many of those fixed terms are now coming to an end, and borrowers are reverting to a standard variable rate, which is often much higher than they were paying before. This sudden jump in repayments can put a strain on household budgets. But, if you act now and refinance, you may secure a more favourable deal.

Thousands of mortgage holders have already seen the benefit of refinancing in the current interest rate environment. According to the ABS, more than 155,000 people refinanced their home loans in the June 2025 quarter. This was 23.2% higher than the same time in 2024.

The benefits of refinancing

Refinancing isn’t just about getting a lower interest rate, though that’s certainly a major motivator. It’s a strategic financial tool that can help you achieve a range of goals, from reducing your expenses to funding a new investment.

Lower interest rates to save money

This is the most common reason people refinance a home loan in Australia. A lower interest rate means a smaller repayment, which can free up cash flow each month. You can use these savings to boost your investments, pay for school fees or simply improve your family’s cash flow. Over the life of your loan, these small savings can accumulate to a significant amount of money.

Access equity for investment or renovations

If the value of your property has increased since you bought it, you may be able to access the equity in your home. This is the difference between your home’s value and what is owed on your mortgage. 

Refinancing allows you to access this equity, providing you with a lump sum you can use to upgrade your home, buy an investment property or fund other significant purchases.

Consolidate high-interest debts

For many Australians, juggling multiple debts – such as credit cards and personal loans – is a common reality. These debts often come with higher interest rates. By refinancing, you can consolidate these into your mortgage, reducing your overall interest repayments and simplifying your finances into a single, manageable monthly payment.

The costs of switching loans

While the benefits are clear, it’s important to be aware of the costs involved in a mortgage refinance. These can include:

• Discharge and government charges: Your current lender might charge a discharge fee to release the mortgage from the property title. You may also be required to pay government charges like stamp duty and land registration fees to register the new mortgage.

• Valuation and legal costs: The new lender will require an updated valuation of your property, which may incur a fee. There are also legal or conveyancing costs to complete the transfer of the mortgage.

• Break fees:  If you’re still on a fixed-rate loan, you may need to pay a break fee to end your term early. This fee is typically calculated based on how much time is left on your fixed term and the current market rates. Given where we are in the rate cycle, this will be less common for most borrowers today.

It’s important to weigh these against the potential savings. In many cases, a slightly higher upfront cost can still make refinancing worthwhile if it reduces your long-term interest payments. Additionally, some lenders offer incentives, like cashback offers, to attract new clients. These can often help offset the costs of switching.

Signs it’s time to refinance

How do you know if it’s the right time to switch home loans? Here are a few signs:

Your interest rate is above market average

Since the RBA began cutting rates, many people on older loans are paying a higher interest rate than what’s currently available. 

For example, according to money.com.au, the average variable owner-occupier rate in Australia in September 2025 was 6.36% p.a., while the lowest variable refinance home loan rate available was 5.14% p.a. 

If you switched to the lower rate, how much would you save?

Let’s say you bought a home in Melbourne five years ago at the then-median price of around $660,000, according to Cotality. With a 20% deposit, your original loan would have been $528,000. On a 30-year term at the average variable rate of 6.36% p.a., your monthly repayments would have been about $3,300.

After five years of regular repayments, your loan balance would now be closer to $494,000. If you refinanced that amount at 5.14% for the remaining 25 years, your new monthly repayment would drop to roughly $2,930.

That’s a saving of about $370 a month – or more than $4,400 a year – simply by switching to a more competitive rate.

It is important to note that we are proposing you keep your remaining loan term the same so you don’t reset your repayment to a new 30-year loan term (albeit even cheaper monthly repayments). While taking a new 30-year term may look financially better, it is a poor choice in the long run, as the compounding effects really add up.

Your loan no longer matches your needs

Perhaps your financial situation has changed and you’d benefit from additional loan features like an offset account or redraw facility. Maybe you want to switch from a principal and interest loan to an interest-only one for your investment property. If your current loan doesn’t have the features you need, it’s a good sign to start exploring alternatives.

The steps to refinance

Once you’ve decided to refinance, the process typically involves these steps:

1. Compare multiple lenders: Don’t just go with your existing bank. Look at a wide range of lenders to compare the refinance offers available. This is where a broker becomes invaluable.

2. Gather your documents: Just like your original home loan application, you’ll need to provide updated financial documents, including payslips, tax returns and bank statements.

How AXTON Finance can help

As a busy professional and homeowner, you don’t have hours to spend comparing loan products and haggling with lenders. This is where an experienced refinance mortgage broker like AXTON Finance can help. We can:

• Negotiate rates with your current lender: We’ll approach your bank with a case for a rate reduction, using our industry knowledge and your strong financial position to secure a more favourable deal.

• Find cost-effective alternatives across the market: If your current lender doesn’t have an offer that suits you, we have access to a vast network of lenders, from the major banks to specialist providers. We’ll find a loan that not only offers a suitable rate but also the features and flexibility you need.

With expert guidance, you can save money, streamline your finances and make the most of your home’s value without unnecessary stress.

Ready to cut your repayments and make your home loan work harder? Talk to AXTON Finance about refinancing. Our expert Melbourne brokers can negotiate sharper rates, structure your loan to suit your goals and take the hassle out of switching. Call 03 9939 7576, email [email protected] or get in touch today.

After a prolonged period of high interest rates, recent cuts from the Reserve Bank of Australia (RBA) are offering Melbourne homeowners and investors a welcome chance to rethink their mortgage strategy. 

Whether you’re looking to reduce repayments, unlock equity or restructure for future growth, refinancing now could be a smart move.

What the rate cuts mean for you

The RBA’s decision to cut the official cash rate in August for the third time this year, bringing it to 3.60%, is a direct response to a changing economic environment. Inflation has continued to ease, rising just 2.7% in the June quarter, down from 2.9% in March, according to the Australian Bureau of Statistics (ABS).

Unemployment has also eased slightly, with the rate falling to 4.2% in July from 4.3% in June, according to the ABS. While this is still considered a tight labour market, it suggests that the economy is no longer overheating. 

The RBA’s goal with these cuts is to keep inflation sustainably within its target band of 2–3% while avoiding a sharp rise in unemployment. By easing monetary policy, the RBA is providing support for economic growth, aiming for a “soft landing” where inflation moderates without causing a significant economic downturn. 

This not only impacts people taking out new loans, but also existing mortgage holders.

If your lender has passed the rate cuts on to their customers in full, homeowners with a variable-rate home loan would already have seen a reduction in monthly repayments. Across the country, average monthly repayments have dropped by around $70–$120, depending on the state, according to Mozo. 

In Victoria, for example, a typical owner-occupier loan of $628,000 is likely to see repayments fall from $3,989 to $3,894 per month – a saving of $95 monthly, or $1,137 over the course of a year.

Refinancing for a lower interest rate

If you’re on a fixed-rate loan, your repayments won’t change until the fixed period ends. However, refinancing gives you the option to move sooner and secure a rate that better reflects today’s lower cash rate environment. Depending on your lender, there may be break costs to consider, but the long-term savings can sometimes outweigh the upfront expense.

For borrowers on variable rates, there are also opportunities. While your repayments may already have dropped in line with recent cuts, not all lenders pass on the full benefit. On top of that, competition between banks and non-bank lenders is intense, with many offering sharper rates or cashback deals to attract refinancers. Comparing these options and switching through refinancing could see you reduce repayments even further.

The difference might seem small, but it adds up quickly. Those savings can be redirected to other goals, such as paying down your loan faster, building an investment portfolio, funding renovations or boosting your savings buffer.

Looking beyond interest rates

A rate cut isn’t just about reducing your monthly repayments. Even if your variable rate has already adjusted, refinancing can still deliver value. Some lenders don’t pass on the full cut, and others may offer better features, loan structures or terms that suit your goals. 

Consolidating multiple loans

Refinancing can help you bring multiple debts together, including your home loan, personal loans or other mortgages. Consolidating your lending can simplify repayments, improve cash flow and unlock equity for future plans.

Accessing equity

Refinancing allows you to release some of the equity in your property. This can be used for a range of strategic purposes – from funding a renovation, to helping children with a deposit or growing your investment portfolio.

Re-structuring for tax efficiency

For investors or self-employed clients, the way your loans are structured can have significant tax implications. Refinancing provides an opportunity to ensure your lending is optimised for deductibility and flexibility.

Improving product features

Some loans may not include features like offset accounts, redraw facilities, or flexible repayment options. Refinancing can give you access to these tools, helping you take greater control of your finances.

Switching to new loan terms

Refinancing gives you the option to change your loan term, which can have a big impact on your finances. Shortening your loan term means you’ll pay off your mortgage faster and reduce the total interest paid over the life of the loan. On the other hand, extending your loan term can lower your monthly repayments, giving you extra cash flow for other priorities, like investing, renovating or saving.

What to consider before refinancing

While the current environment presents clear opportunities, refinancing may not be the right move for your situation or long-term goals. It’s important to weigh up:

• Potential break costs: If you are still in a fixed-rate period, exiting early can incur significant fees that may offset the savings from a lower rate.

• Application or discharge fees: Lenders may charge fees to set up a new loan or discharge an existing one, which need to be factored into your overall cost.

• The total cost of switching versus the projected savings: It’s not just about the monthly savings. You also need to think about the total interest you could save over the life of the loan. Calculate whether the combined costs – including fees, charges and any temporary interest differences – are worth the potential savings. This helps ensure that refinancing actually improves your financial position in the long term, not just in the short term.

• Your property’s value: The equity available in your home affects your borrowing options and whether refinancing is financially viable.

• Your long-term plans: If you plan to sell within a short period, the benefits of refinancing may be limited, as costs and administrative requirements could outweigh the savings.

Why using a broker makes a difference

Refinancing can be more complex than simply switching to the lowest advertised rate. Every borrower’s situation is different – from loan size and income structure to investment goals and long-term plans. A mortgage broker like AXTON Finance can provide expert guidance tailored to your circumstances.

We do more than compare rates. We analyse your current loan, identify opportunities to reduce repayments, release equity or restructure for tax efficiency and recommend the loan term and product features that suit your goals. With access to premium offers and a range of lenders, we ensure you are getting a solution that works for today and the future.

Ready to make the most of the rate cuts? Refinancing can be complex, but with the right guidance, it can also be highly rewarding. Contact AXTON Finance today to discover how much you could save while building a mortgage strategy tailored to your goals. Call 03 9939 7576, email [email protected] or get in touch to get started.