Refinance to lock in a lower interest rate

Your current interest rate might be costing you more than you realise.

If you locked in a fixed rate two or three years ago, or if you've stayed on the same variable rate for years without reviewing it, you could be paying significantly more than current borrowers are accessing through their lenders. Refinancing to a lower rate means less interest paid over the life of your loan and more money staying in your offset account or redraw facility each month.

Why Your Rate Might Be Higher Than It Should Be

Lenders typically reserve their most competitive rates for new customers, while existing borrowers often remain on higher rates unless they actively request a review. If your fixed rate period is ending and you're reverting to a standard variable rate, the difference can be substantial. In our experience, borrowers coming off fixed terms are often quoted reversion rates that sit well above what the same lender offers to new applicants for the same loan amount and property valuation.

Consider a borrower in Brisbane's inner suburbs who fixed their rate three years ago at what seemed like a sensible option at the time. When that fixed period ended, their lender moved them to a variable rate that was 0.80% higher than what new customers were being offered for identical circumstances. On a $600,000 loan amount, that difference translates to around $4,800 extra in interest each year. A loan health check identified three lenders willing to offer a lower rate with comparable features, including an offset account and redraw facility. After refinancing, the monthly repayment dropped by $400, which went straight into their offset account to reduce interest further.

When Refinancing Makes Sense for Your Situation

Refinancing to access a lower interest rate makes sense when the savings outweigh the costs involved in switching lenders. Application fees, valuation costs, and potential discharge fees from your current lender need to be measured against the ongoing monthly savings. If you're stuck on a high rate and the difference between what you're paying and what's available is more than 0.30%, the numbers often work in your favour within the first year.

If your fixed rate is expiring in the next few months, now is the time to compare refinance rates rather than waiting until the reversion happens. Lenders need several weeks to process applications, and starting early means you can lock in a rate before your current term ends. Waiting until after you've reverted to a higher variable rate means paying more interest during the refinance process.

What the Refinance Process Involves

The refinance application follows a similar path to your original home loan application. Your new lender will require a current property valuation, proof of income, and details of your existing loan. They'll assess your borrowing capacity based on your current financial position, which may have changed since you first took out your mortgage. If you've paid down your loan or your property has increased in value, you might also have the option to access equity for other purposes, though that's a separate consideration from refinancing purely for a lower rate.

Most lenders can process a straightforward refinance within three to four weeks if your income and employment are stable and the property valuation comes in as expected. The discharge process with your existing lender happens in the background once the new loan is approved. Your repayments simply switch from one lender to another, usually without any gap or duplication.

Fixed or Variable After You Refinance

Once you've decided to move your mortgage, you'll need to choose whether to switch to variable or lock in another fixed term. Variable interest rates give you access to offset accounts and unlimited additional repayments, which can reduce your loan costs over time if you regularly have surplus income. Fixed rates provide certainty around your repayments for a set period, which helps with household budgeting but typically comes with restrictions on extra repayments and no offset access.

If you want both options, a split structure lets you fix part of your loan while keeping the rest variable. This approach gives you some protection if rates rise while maintaining flexibility to make extra repayments and use an offset account on the variable portion. Many Queensland borrowers we work with choose this structure when refinancing, particularly if they expect income variability or want to consolidate other debts into their mortgage while keeping repayment flexibility.

What Happens If You Don't Act

Staying on a high rate because the refinance process feels like effort means paying more interest every month. If your lender isn't offering you the same rates they're advertising to new customers, they're unlikely to reduce your rate without you taking action. Some borrowers assume loyalty will be rewarded, but in reality, lenders rely on inertia. The longer you wait, the more you pay.

If you're unsure whether refinancing makes sense for your circumstances, a loan review with current interest rates and your loan details will show exactly how much you could save. From there, you can decide whether switching lenders or negotiating with your current lender is the right move. Either way, knowing your options costs nothing and could improve your cashflow significantly.

If you're paying more than you should be, or if your fixed rate is ending soon, call one of our team or book an appointment at a time that works for you. We'll compare your current rate against what's available, walk through the numbers, and help you decide whether refinancing makes sense for your situation.

Frequently Asked Questions