Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
When Is the Right Time to Refinance?
The right time to refinance is when the financial benefit of switching outweighs the cost of doing so, and that moment arrives more often than most homeowners realise. In a competitive lending market, lenders regularly offer their best rates to new customers while existing customers drift upward on loyalty tax rates. If you haven't reviewed your home loan in the past two years, there's a strong chance you may be overpaying. A free rate review across 50+ lenders takes 20 minutes.
The single most reliable trigger for refinancing is a fixed rate expiry. When your fixed term ends, you roll onto the standard variable rate, which is almost always significantly higher than what a competitive lender will offer a new customer. I get calls from clients the day after they receive the "your fixed rate has expired" letter, surprised by their new repayment. The better call is 3–6 months before expiry, when we have time to plan.
The Strongest Triggers to Refinance
1. Fixed Rate Expiry
Your most important trigger. The revert rate after a fixed period is typically 0.5–1.5% above current best variable rates. Refinancing as your fixed period ends captures a competitive rate before the revert kicks in. Apply 2–3 months before expiry so the new loan settles right at the changeover.
2. Rate Drop of 0.5%+
If market rates have dropped 0.5% or more and your lender hasn't passed it on in full, the gap between your rate and the market has widened. A 0.5% saving on a $700,000 loan is $3,500/year, typically recovered within 3–6 months of switching costs.
3. Two Years Without Reviewing
Lenders actively compete for new customers, not existing ones. If you haven't reviewed your loan in 2+ years, there's a strong probability that new customer rates are materially better than yours. A 20-minute rate review costs nothing and reveals exactly where you stand.
4. Major Life Change
Marriage, divorce, new baby, job change, buying an investment property, each changes your financial profile and may open better lending options than were available before. These are natural moments to review your loan structure alongside the life change.
5. Wanting Different Loan Features
Offset account, redraw facility, ability to make extra repayments without penalty, if your current loan lacks features that would save you money, switching to one that has them may be worthwhile even without a rate improvement.
When NOT to Refinance
- Fixed rate with high break cost: If you're mid-fixed-term and the break cost exceeds 12–18 months of rate saving, waiting is usually better
- Very close to paying off the loan: Setup costs on a near-complete loan rarely pay back in interest saving
- LVR above 80% without equity: LMI on a new loan can outweigh the rate saving, check the full cost
- Recent credit events: A recent default or credit application may result in a worse outcome now vs in 12 months
The Break-Even Calculation
Refinancing is worthwhile when the annual interest saving exceeds the switching costs within a reasonable timeframe. Example:
- Loan balance: $650,000 | Rate saving: 0.55%
- Annual saving: $3,575 | Switching costs: $1,400 (discharge + application + legal)
- Break-even: 4.7 months, refinancing makes strong financial sense
The Free Rate Review, What It Involves
A rate review takes 20 minutes. We look at: your current loan balance, rate, remaining term, features and lender. We compare this against our panel of 50+ lenders. We show you your best alternatives, the annual saving, the switching cost, and the break-even point. No obligation, you decide whether to proceed.
