Benefits of refinancing your home loan


Moving your current home loan to another lender may help you get ahead on your loan and finances. But how does refinancing work exactly?

Switching up your lender could help you save or get better value with:

  • A lower interest rate or comparison rate
  • Lower ongoing fees
  • Reduced repayments
  • More valuable and flexible features and services

Factors to consider if you’re thinking about refinancing your home loan

Before you switch you loan to a new provider, there are some things to consider when refinancing including:

How long have you had your home loan?
Sometimes, the costs associated with refinancing might outweigh the benefits of a lower interest rate. Make sure you’re across any applicable fees and charges such as annual, application, discharge fees and break costs etc. Use our refinancing calculator to estimate how much you could be saving if you switch to ubank.

Is there a special offer or incentive available?
Many lenders will offer a cashback or introductory rate for a fixed rate period. These usually have time limits and conditions attached. It’s important to weigh up the pros and cons to determine what’s right for you. It’s a good idea to keep note of the comparison rate, which will include the interest rate on a loan as well as certain fees and charges.

Could you be paying off your mortgage faster or reduce repayments?
Refinancing to a loan that offers a redraw facility (by letting you access any extra home loan repayments that you’ve made), or adding an offset account to your home loan, could help to reduce your interest repayments.

Can you refinance your home loan to access equity?

If you’re looking to renovate or make a big-ticket purchase, one of the big benefits of refinancing is tapping into your home equity to access additional funds. We know home renos can be expensive and a bit out of reach if you don’t have the cash up front. In this case, refinancing is a great way to access equity already in your property.

Here are some tips for refinancing

Having already purchased your home, you’ll be familiar with the home loan application process. An easier part of refinancing is that you won’t need to worry about strata reports, pest inspections, open houses and auctions.

Here are some things to expect when refinancing:

  • If you’re switching banks, you’ll need to provide existing home loan statements and evidence of ownership. These documents will show how much you still owe on your loan and the repayments you’ve made to date.
  • You’ll usually need to provide recent payslips, any alternative income statements, identification documents and credit card statements. We make it much easier if you get a home loan with ubank. Our Smart Statements process lets you log in to your other accounts through a safe and secure portal to provide your income and expenses to us.
  • If you have any outstanding debts, it might be a good idea to streamline your debt and consolidate what’s left.
  • Check if your current lender charges any exit or break costs. This info should be available online, but if you have no luck, give your lender a call.
  • Make sure the new rate you want is for the long term and not just for a honeymoon period.
  • Interest rates are just half the story because they don’t factor in bank fees. To find out the true cost of a loan, you need to check the comparison rate.
  • Above all, you need to weigh up the costs and benefits if you refinance. Check out our refinancing calculator to see how your current loan stacks up with our loans.

Our answers to some common refinancing questions

How much does it cost to refinance a home loan?
The cost of refinancing a home loan will vary greatly depending on your current loan and the loan you’re looking to get. As we mentioned before, make sure to look at both the fees you’ll be charged on your new loan alongside the fees you might have to pay if you leave your current lender.

How soon after buying a home can you refinance?
You could refinance your home loan as soon as it has been settled if you wanted to. However, you may be charged fees by your current home lender when switching over to a new loan, so carefully weigh up the risks and costs before making your decision.

How long does it take to refinance a home loan?
Just like the cost of a home loan, the speed of refinancing is dependent on your lenders.

At ubank, we can usually give you an approval within 1-2 weeks after the application has been submitted.

Once your loan is approved, we’ll help you start the process of notifying your existing bank to move your loan across to us. Depending on who you’re currently with, this process can take around 30 days.

Do I need a deposit to refinance my home loan?
When you refinance your loan, you might not need a deposit depending on your home equity. Equity is the difference between how much your property is worth and your remaining loan balance. For example, if you have a property worth $1M and a loan balance of $600K, you’ll have up to $400K in equity, or 40% equity. If you have less than 20% equity, you’ll usually have to pay lenders mortgage insurance (LMI). But if you refinance to a ubank owner occupied principal & interest (P&I) loan, you can have as low as 15% equity without having to pay LMI.

Refinancing with ubank

Along with our award-winning home loans and competitive rates, we also offer unlimited redraws on our variable rate home loans.

Start saving today and switch to a ubank home loan!