Refinancing in 2026: compare the whole loan, not just the rate

Start with the outcome you want

A refinance replaces your existing home loan with another loan. It may improve pricing, features or flexibility, but moving lenders is not always necessary. Decide whether your priority is lower ongoing cost, faster debt reduction, different features or a more manageable budget.

Ask your current lender for a pricing review, then compare suitable alternatives. Use your outstanding balance and remaining term rather than a generic advertised example. A lower required repayment can reflect a longer term, not a genuine reduction in lifetime cost.

In 2026, use a dated quote for your own circumstances rather than assuming last year's rate or a cash-rate headline is what your lender will offer.

Compare savings after switching costs

Request the interest rate, ongoing fees and all switching costs: discharge, application, valuation, registration and any fixed-rate break charge. If your equity is below 20%, ask whether a new LMI charge could apply. LMI protects the lender, not your household.

A comparison rate helps compare standardised costs, but its example loan amount and term may differ from yours. Ask for a written comparison using the same balance and term for both options.

Further reading: ASIC Moneysmart switching guide.

Offset, redraw and fixed-rate choices

An offset holds cash in a separate linked account and reduces the balance used to calculate interest. Redraw may let you access extra repayments made into the loan, subject to lender conditions. Compare account fees, the loan rate and access restrictions before paying for a feature you will rarely use.

Fixed rates provide certainty for the agreed period but may limit extra repayments and trigger break costs. Variable repayments can change, and features vary by product. A split loan combines both, with separate conditions on each portion. Match the structure to how you actually save and repay.

If you may turn your home into an investment, obtain tax advice before redrawing or mixing personal and investment funds.

See offset accounts and fixed, variable and split loans.

Keep your mortgage finish date visible

Consider a hypothetical $400,000 loan at a constant 6% rate. A 20-year monthly principal-and-interest schedule requires about $2,866 a month and $287,774 total interest. Extending the same balance and rate to 30 years lowers the repayment to about $2,398, but increases total interest to $463,353.

That is approximately $468 less each month but $175,579 more interest over the full term. A longer term can be useful in some circumstances, but make the trade-off deliberately.

Illustration calculated with monthly interest at 6% ÷ 12, payments at month-end and no fees, offset or rate changes. Figures are rounded; actual lender calculations differ. This is not a current market quote.

If a refinance reduces your interest cost and you can comfortably keep paying the previous amount, discuss how that could shorten the repayment timeline. Check the new loan's repayment rules first.

Prepare a stronger refinancing conversation

• Bring a current statement, rate, remaining term and fixed expiry date.
• List your income, spending, liabilities and property details.
• Identify the features you use and those you can do without.
• Ask for the net savings, break-even point and same-term comparison.
• If consolidating other debts, compare total interest and plan to repay those amounts sooner.
• For an investment property, ask your accountant how the new structure interacts with the legislated 2027 tax changes.

Aussie Wealth Group can help you consider suitable lending options. If repayments are becoming difficult, contact your lender early about hardship support rather than assuming a refinance will be available.