In short: Refinancing means replacing your current home loan with a new one, either with your existing lender or a different one, to get a lower rate, better features, access to equity or a simpler debt position. GNT Finance compares Melbourne lenders, checks the switching costs against the savings, and manages the whole application. For most home loans, our service costs you nothing.
Most Melbourne households are paying more than they need to. Lenders reserve their sharpest pricing for new customers, so a loan that was competitive when you bought in Craigieburn or Sunbury three years ago has probably drifted well above what the same bank now offers a fresh applicant. Refinancing is how you claw that back. It is also the tool for pulling equity out for a renovation, rolling a car loan and credit cards into one repayment, or getting off a fixed rate that no longer suits you.
When refinancing makes sense
Typical situations we see from clients across Melbourne's north:
- Your variable rate is 0.50 percentage points or more above what comparable lenders are offering on a like-for-like loan.
- Your fixed term is ending and your lender wants to roll you onto an uncompetitive revert rate.
- You have built up equity through repayments and price growth and want to use it for a renovation, a deposit on an investment property or a family need.
- You are juggling a personal loan, a car loan and a couple of cards alongside the mortgage and want one repayment through debt consolidation.
- You want features your current loan lacks, such as a proper 100% offset account or the ability to split part of the balance.
If you are not sure which bucket you fall into, our when to refinance guide walks through the decision, and the refinance calculator puts numbers on it.
How GNT Finance runs a refinance
- Loan health check. Send us a recent statement. We identify your current rate, remaining term, fees and any fixed-rate break period, then benchmark it against the market.
- Savings versus costs. We calculate the total switching cost (discharge, new-loan setup, government registration fees, any break cost) and show you the payback period in months. If the numbers do not stack up, we say so.
- Lender shortlist. From our panel of banks and non-bank lenders, we select two or three that suit your income type, LVR and goals, and explain the trade-offs between them.
- Application and valuation. We lodge the application, order the valuation and handle the lender's questions. Many refinances are approved on an automated valuation without anyone visiting the property.
- Discharge and settlement. We lodge the discharge form with your outgoing lender and coordinate settlement. The new lender pays out the old loan, and you simply start paying the new one.
Most refinances settle in two to four weeks.
Refinance options compared
| Refinance type | What it does | Suits |
|---|---|---|
| Rate-and-term | Same balance, lower rate or different term | Borrowers whose only issue is price |
| Cash-out (equity release) | Increase the loan and take the difference as cash | Renovations, investment deposits, big purchases |
| Debt consolidation | Fold other debts into the mortgage | Households paying high-rate personal debt |
| Fixed to variable | Exit a fixed loan (with break costs) for flexibility | Borrowers expecting rate falls or planning to sell |
| Split loan | Part fixed, part variable | Anyone wanting certainty plus offset access |
| Internal repricing | Ask your existing lender to match the market | Borrowers who want a quick win with no paperwork |
We try internal repricing first where realistic; if your lender will not move, we move you.
Eligibility and what lenders check
Refinancing is a fresh credit application, so the new lender assesses you as if you were buying today. That means:
- Serviceability at your new rate plus the APRA buffer of 3 percentage points. If your income has dropped since you bought, this can be the sticking point.
- LVR based on a current valuation. Below 80% means no lenders mortgage insurance. Above 80% usually means a new LMI premium, which can wipe out the benefit of switching.
- Credit conduct. Twelve months of clean repayment history on your current mortgage carries a lot of weight. Missed payments or recent defaults narrow the options.
- Loan purpose. Cash-out above a certain amount (often $100,000 or more) usually needs a stated purpose and sometimes evidence, such as a builder's quote.
Documents you will need: recent payslips or business financials, your last three to six months of home-loan statements, statements for any debts being paid out, ID, council rates notice and, if applicable, the current fixed-rate contract. Our documents checklist sets it all out.
Worked example: a Wollert refinance
A couple in Wollert owe $580,000 on a home now valued at $800,000, so the LVR is 72.5%. They have been on 6.70% p.a. variable with their original lender for four years, and their repayment is roughly $3,742 a month on the remaining 26-year term.
For illustration, at 6.00% p.a. on a fresh 30-year term, the repayment on $580,000 is about $3,477 a month, a saving of around $265 a month. Keeping the original 26-year term instead, the repayment at 6.00% is about $3,615, still $127 a month less while paying the loan off on the same schedule.
Switching costs in this case: discharge fee around $350, new-lender setup around $500, Victorian mortgage registration and discharge fees roughly $250 combined. Call it $1,100 all up. On the 30-year option, the payback period is just over four months. If they keep paying the old $3,742, the extra $265 a month goes straight to principal.
Try your own figures in the refinance calculator or the extra repayments calculator.
Costs and fees to budget for
| Cost | Typical range | Notes |
|---|---|---|
| Discharge fee (old lender) | $150–$400 | Charged on every payout |
| Application or settlement fee (new lender) | $0–$700 | Often waived on promotion |
| Valuation | $0–$300 | Frequently free for refinances |
| Mortgage registration and discharge (VIC) | About $120 each | Government fees |
| Fixed-rate break cost | $0 to many thousands | Depends on rate movement and time left |
| LMI (if LVR over 80%) | 1%–4% of loan | The main reason high-LVR refinances often fail the cost test |
| Ongoing annual package fee | $0–$400 | Weigh against the package benefits |
Mistakes to avoid
- Resetting to 30 years without a plan. A lower repayment feels good, but stretching the term adds interest. If you refinance to a longer term, keep paying the old amount or use an offset to stay ahead.
- Chasing cashback over rate. A $2,000 cashback on a rate 0.20 points higher is a losing trade on a $600,000 loan within about two years.
- Ignoring break costs. If you are on a fixed rate, get the break cost quoted in writing before anything else. Our guide to breaking a fixed-rate loan explains how it is calculated.
- Consolidating short-term debt into 30 years. Folding a $20,000 car loan into a mortgage cuts the rate but can triple the total interest unless you pay it down faster.
- Applying to several lenders at once. Multiple credit enquiries in a short window can lower your score and worry the eventual lender. See credit score and home loans.
- Forgetting the comparison rate. The headline rate excludes fees.
Why refinance through a mortgage broker
A broker sees the whole market, not one lender's product sheet. That matters most in refinancing, where the differences between lenders on cash-out policy, valuation approach and fixed-rate pricing can decide whether a switch is worthwhile at all. Gorakh Timilsina spent years as a Senior Credit Officer assessing applications from the lender's side, so he knows which files get waved through and which get sent back for more questions. GNT Finance is paid by the lender you settle with, which means no cost to you for our home-loan service in most cases, and under the Best Interests Duty we are legally required to recommend what suits you, not what pays us most.
Frequently asked questions
How often should I review my home loan?
Every twelve months is a sensible rhythm, and always when a fixed term is about to end. Lenders quietly widen the gap between new-customer and existing-customer pricing over time, so a loan that was competitive at settlement rarely stays that way. A ten-minute review with your statement in hand is enough to tell whether it is worth acting.
Will refinancing hurt my credit score?
A single application creates one credit enquiry, which has a small and short-lived effect. The damage comes from lodging several applications in a short period. Working with a broker avoids this because we identify the right lender before applying, so you usually only need one enquiry.
Can I refinance if my property value has dropped?
Yes, provided your LVR is still acceptable to the new lender. If the fall has pushed you above 80% LVR, a refinance may trigger LMI and lose its appeal. In that case, it is often better to ask your existing lender for a rate reduction and revisit refinancing once you have built more equity.
How much equity can I take out when refinancing?
Most lenders will let you borrow up to 80% of the current value without LMI, and some go to 90% with LMI. On a $800,000 home with a $500,000 loan, that means up to $140,000 of accessible equity at 80% LVR. Lenders will ask what the money is for and may cap cash-out for undocumented purposes. Use the equity calculator to estimate yours.
Is it worth refinancing for a small rate difference?
It depends on your balance and how long you plan to keep the loan. A 0.25 point cut on a $600,000 loan saves roughly $95 a month, or about $1,140 a year, so switching costs of around $1,000 are recovered inside a year. On a $250,000 balance the same rate cut saves about $40 a month, and it may be smarter to negotiate with your current lender instead.
Talk to GNT Finance
Send us your latest home-loan statement and we will tell you within a business day whether refinancing is worth it and roughly what you would save. We work with clients across Melbourne's north from our Mickleham office and Australia-wide by phone and video, in English, Nepali and Hindi. Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.