It's usually not a great idea to refinance when interest rates are high, but there can be some situations where it might make sense.

Is 2023 a Good Time to Refinance?

As a number of low fixed-rate home loans taken in 2020 and 2021 are expiring, there is a push for many Aussie homeowners to refinance their mortgages. According to Property Exchange Australia, there are signs that 2023 could be a year with historically high numbers of Australians refinancing. Read on to learn more.

While some property owners have already refinanced, surveys show that between 35 and 45 per cent are planning on refinancing a home in 2023. Worries over inflation and concerns about interest rates rising further top the list of reasons such a high percentage of homeowners have refi plans.

While you may not have galvanised plans to refinish your home, it is worth considering, given the current economic climate.


What Does Refinancing a Home Loan Mean?

When you refinance a mortgage, you pay out your current loan with a new one. Property owners may choose to do this for several reasons, including:

  • Consolidate debts
  • Access Equity
  • Change the type of loan or get a loan with different features
  • You are close to the end of a fixed-rate term, and you want a reasonable interest rate
  • Dissatisfaction with the current lender


How Does Refinancing Work?

Refinancing may sound daunting to many, but when you are working with experienced professionals, it is not as difficult as you think. A key point to remember is to compare offers to make sure the benefits balance out the cost of refinancing.

1. Speak with your broker – Explain what you expect from refinancing so you and your broker are on the same page. Your broker may ask a few questions about your employment and financial situation to find the best loan.

2. Documentation – Your broker will need some paperwork to confirm your identity and your financial position. You can save some time if you have these papers ready ahead of time. You will need,

  • Personal information and identification such as a driver’s license, passport, or birth certificate
  • Proof of your income, like pay slips and a group certificate if you work for someone else
  • Your tax returns and Business Activity Statements if you run your own business
  • Your current home loan statement.

3. Property Valuation – After confirming you are eligible, the next step is for them to value your property and determine the loan-to-value ratio.

4. Settlement – A new loan should be approved if all goes according to plan. Your lender will transfer the property and debt to your new loan. Contact your original lender to work with the transfer if you are refinancing through a different lender. Often, the settlement process can take weeks, and you may have to cover the cost of fees. Ultimately, your savings will make the process worth your time and effort.

Gavin Harrigan, Quantum Finance


Top Considerations When Refinancing

Even after finding what appears to be a good situation with a financial provider, it is worth your time to gather as many details as possible, so you are sure you are making the right choice.

  • Get what you need from your new loan – Refinancing is an opportunity to save money, but it also gives you a chance to update the features of your loan. Ask your broker about ways to update your loan, so it fits your life.
  • Compare fees – Fees are a part of the loan process, but you should see some value for the fees you will pay. Look for tools like, offset accounts, card inclusions, redraw facilities and flexibility in repayments.
  • Lender security – To be sure that your lender will be secure, you should look into their reputation as well as their longevity. Look for good communication, quick responses to your questions, and transparency about rate changes and fees. You should ensure the lender is acting in your best interests, giving you sound advice, and valuing you as a customer
  • An app that is helpful and easy to use – The majority of lenders have apps to help their customers get the most out of their relationship with their financial provider. Inquire about the app, and do not be afraid to ask for a hands-on tutorial, so you are sure you have what you need. A lender who is concerned about you as a customer will be pleased to assist you with their institution’s app. A few features you should find on the app include:
      • Seeing your offset account
      • Your redraw capabilities
      • How much you owe on your loan

Another point to remember when you are planning on refinancing is to check for any helpful promotional offers. Currently, there are some cashback offers on the market of up to $4,000. Want to find out if you are eligible or to simply learn more? Check out our refinancing page today!

Gavin Harrigan

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With over 18 years in the finance industry, Gavin's wealth of knowledge relating to home loans is matched by few in Australia. This knowledge is reflected in his dozens of awards, including being inducted into the Plan Australia Hall of Fame. His qualifications include a Bachelor of Commerce from Curtin University for Applied Finance and Commercial Law and a Diploma of Finance and Mortgage Broking Management from AAMC Training Group.

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