A home loan review checks whether your existing rate, fees, repayment structure and features still suit your circumstances. It does not automatically mean refinancing, and a lower advertised rate does not guarantee a better overall outcome.
Reviewing periodically—and when your circumstances or loan conditions change—can help identify unnecessary costs, unsuitable features or emerging repayment pressure. The decision should compare the remaining cost of the current loan with the full cost and risks of any alternative.
How often should you review a home loan?
There is no mandatory review schedule that suits every borrower. An annual check can be a practical reminder, but a review may also be useful after a material change such as:
- the end of a fixed or introductory rate;
- a lender changing the interest rate or fees;
- a significant change in income, expenses or employment;
- starting or expanding a business or becoming self-employed;
- a change in family circumstances;
- the purchase or sale of another property;
- plans for renovations, investment or debt consolidation;
- a substantial change in property value or loan balance;
- an adverse credit event or improvement in recent repayment conduct; or
- difficulty meeting existing repayments.
A review can conclude that the existing loan remains suitable. Switching only makes sense where the expected benefit outweighs the financial and practical costs.
1. Check the current rate, fees and remaining term
Gather the latest loan statement and contract information. Record:
- the current balance and available redraw;
- the interest rate for each fixed or variable portion;
- the comparison rate, where available and relevant;
- monthly, annual and package fees;
- the scheduled repayment and frequency;
- the remaining loan term;
- any interest-only expiry date;
- offset-account arrangements;
- break costs, discharge fees or switching fees; and
- the payout process and any other linked products.
Rates and fees should be assessed together. A slightly lower rate may not compensate for a costly package, switching expenses or features that the borrower will not use.
2. Ask the current lender what it can offer
Before refinancing externally, ask the existing lender whether it can reduce the rate or move the loan to a more suitable product. An internal change may avoid some discharge, application, valuation and registration work, although switching or product-transfer fees may still apply.
Compare any retention offer with other suitable options. A rate reduction is useful only if the resulting product, fees, term and features remain appropriate.
3. Compare the total cost of refinancing
A refinancing comparison should include:
- discharge or termination fees on the current loan;
- fixed-rate break costs;
- application and establishment fees;
- valuation, legal and settlement costs;
- government registration charges or applicable duties;
- annual or package fees on the new loan;
- lender’s mortgage insurance where required;
- broker fees, if any;
- the new interest rate and expected repayments; and
- the total interest over an equivalent remaining term.
Calculate the break-even period
Add the switching costs and compare them with the expected ongoing saving. The break-even period is the time needed for the saving to recover those costs. If the property may be sold or the loan changed again before that point, refinancing may provide limited value.
4. Avoid resetting the loan term without comparing the effect
A lower repayment can result from extending the loan rather than reducing its total cost. For example, replacing a loan with 18 years remaining with a new 30-year term may ease the scheduled repayment but keep the borrower in debt for longer and increase total interest.
Request comparisons using the same remaining term first. If a longer term is being considered for cash-flow reasons, review both the short-term relief and the additional long-term cost.
5. Review equity and potential lender’s mortgage insurance
Lenders assess the amount borrowed relative to the property’s value. A new valuation may differ from an online estimate or the purchase price.
Where the proposed loan is high relative to the lender’s accepted property value, lender’s mortgage insurance or other risk-related pricing may apply. Paying lender’s mortgage insurance on a refinance can outweigh expected rate savings. Existing lender’s mortgage insurance generally does not transfer automatically to a new lender.
6. Check whether the loan features are genuinely useful
Features can add flexibility but may come with higher rates or package fees. Review:
Offset accounts
An eligible offset account can reduce the loan balance used to calculate interest. Consider the amount likely to remain in the account, any account or package fees and whether the offset applies to the whole loan or only part of it.
Redraw
Redraw may provide access to eligible extra repayments, subject to the contract, minimum amounts, processing times, fees and lender discretion. Redraw is not identical to cash held in a transaction account.
Fixed, variable and split rates
Fixed rates can provide repayment certainty but may restrict extra repayments and create break costs. Variable rates can change and may offer more flexibility. A split loan combines elements of both but involves separate balances and conditions.
Interest-only repayments
Interest-only repayments can reduce repayments temporarily, but the principal is not reduced during that period. Repayments can rise when the loan returns to principal and interest, and the total interest cost may be higher.
7. Consider changes in income, expenses and credit position
Refinancing is a new credit application. The lender may assess income, living expenses, liabilities, dependants, repayment history, credit enquiries, property and the proposed loan purpose under its current policy.
A borrower who qualified for the existing loan may not automatically qualify for a new one. Self-employed applicants, recent job changes, reduced income, new debts or adverse credit information can change the available options and required documents.
Where credit history is the main issue, review the cause, age, amount and current status of the event before applying. GQ Finance’s bad-credit home-loan information explains common assessment factors and evidence.
8. Treat debt consolidation cautiously
Adding credit cards, personal loans or other debts to a home loan may reduce the immediate repayment because the debt is spread over a longer period and secured against the property. However, it can increase the total interest, convert unsecured debt into debt secured by the home and create capacity to re-use cleared credit limits.
Compare the consolidated debt over a realistic repayment period, include all costs and consider closing or reducing unused limits where appropriate. Refinancing should address the cause of recurring debt, not only the current balances.
9. Review future plans before changing loans
A suitable structure depends partly on what may happen next. Consider plans to sell, renovate, invest, retire, change employment, start a business or access equity. Some features and fixed-rate periods can reduce flexibility if plans change earlier than expected.
Investment-property borrowers should obtain tax advice before changing loan purposes, redraw arrangements or account structures. GQ Finance does not provide tax advice.
Home-loan review checklist
- Obtain the current balance, rate, fees and remaining term.
- Check fixed-rate, interest-only and introductory-rate expiry dates.
- List the features used and the fees paid for them.
- Ask the current lender for an updated offer.
- Compare alternative loans over the same remaining term.
- Calculate switching costs and the break-even period.
- Check the likely property valuation and equity position.
- Allow for lender’s mortgage insurance where relevant.
- Review current income, expenses, liabilities and credit information.
- Consider upcoming property, family, employment and business plans.
- Read the proposed contract and confirm the total cost before switching.
When a review should focus on hardship rather than refinancing
If repayments are already unaffordable, contact the current lender’s hardship team promptly. Refinancing is not guaranteed, and a new application may not be the safest or fastest response. Free financial counselling may also be available through the National Debt Helpline.
How GQ Finance can help
GQ Finance can review the existing loan structure, compare relevant lender options and explain how rates, fees, term, equity, features and lender criteria affect the comparison. If the purpose involves accessing available equity, you can also review our general information about home-equity release options.
Any application remains subject to eligibility, serviceability, responsible-lending requirements and lender policy. Rates, fees, valuations and product availability can change.
Frequently asked questions
Should every borrower refinance each year?
No. A yearly review can be useful, but refinancing should occur only where the expected benefit outweighs the costs and the new structure is suitable.
Will a lower rate always save money?
No. Fees, lender’s mortgage insurance, break costs, a longer term or unsuitable features can outweigh the rate reduction.
Can I refinance while on a fixed rate?
Possibly, but a break cost may apply. Request a current payout and break-cost estimate before comparing alternatives.
Does refinancing affect my credit report?
A formal application will generally involve a credit enquiry. Compare likely eligibility and lender fit before submitting multiple applications.
ASIC’s Moneysmart guidance recommends comparing the full costs, checking whether the benefits exceed switching expenses and avoiding an unnecessarily extended loan term. See Moneysmart’s switching home loans guide.
This article provides general information only and does not take into account your objectives, financial situation or needs. Consider the full contract, costs and risks and obtain independent legal, tax or financial advice where appropriate.
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