Rate and Term Refinance Australia

A rate and term refinance replaces your current home loan with a new loan at a different interest rate, repayment type or loan term, without increasing the loan amount for cash out or debt consolidation.

No. In a pure rate and term refinance, the goal is to keep the loan amount broadly the same while changing the rate, lender, repayment type or loan term. Some borrowers may roll standard switching costs into the new loan, but it is not used to release extra cash.

Yes. Rate and term refinancing focuses on improving the rate or loan structure without borrowing extra funds. Cash-out refinancing increases the loan amount so the borrower can access equity for another purpose, such as renovations, investing or major expenses.

Yes. Many borrowers refinance purely to move from a higher rate to a lower rate. The real test is whether the repayment saving outweighs discharge fees, application fees, valuation costs, break costs and any new lender charges.

Usually, you should compare the savings using the remaining term on your current loan. Resetting to a fresh 25 or 30 year term can reduce monthly repayments, but it may increase the total interest paid over the life of the loan.

Common issues include weaker serviceability, reduced income, higher living expenses, poor repayment conduct, low equity, a valuation below expectation, fixed-rate break costs or a credit file that no longer fits mainstream lender policy.

You do not always need 20% equity, but refinancing above 80% LVR may trigger lenders mortgage insurance. If new LMI applies, it can reduce or remove the benefit of switching to a lower interest rate.

Typical documents include proof of identity, income evidence, recent home loan statements, bank statements, rates notice, insurance details and information about the property. Self-employed borrowers may need tax returns, financial statements, BAS or accountant-prepared documents.