Why are more Australians turning to refinancing? Is it time for you?
Introduction
Refinancing is rapidly becoming the top choice for Australian homeowners, with refinancing enquiries accounting for 35.98% of total mortgage demand, a 34.9% jump from last year. This surge is driven by Australians seeking better mortgage terms and lower rates.
At ZedPlus, we have guided hundreds of clients through the refinancing process , helping them secure more favorable loan conditions that align with their financial goals. If you’ve been wondering if refinancing is the right move for you, keep reading to see how it can save you money and offer financial flexibility.
Key takeaways
- Refinancing replaces your existing home loan with a new one that may offer better terms and lower repayments.
- A 1 percent drop in your interest rate on a 500,000 dollar loan can save you around 3,600 dollars a year.
- Multiple RBA rate cuts in 2025 have made refinancing more attractive and accessible.
- Lower rates, flexible terms, and improved cash flow are the biggest benefits of refinancing.
- Refinancing also lets you consolidate high-interest debts into a single lower-rate home loans
- Homeowners can unlock their home equity for renovations, investments, or major expenses.
- Comparing refinance loans requires checking fees, features, introductory rates, and fine print.
What is refinancing, and how does it work?
Refinancing is the process of replacing your existing home loan with a new one, either with your current lender or a different one. This involves taking out a new loan that pays off your existing mortgage, and you begin making repayments on the new loan under its updated terms and conditions.
For example, let’s say you currently owe 300,000 dollars on your mortgage with an interest rate of 5 percent. If you choose to refinance and secure a new loan with a 4 percent interest rate, the new lender will pay off the full 300,000 dollar balance of your current loan. In return, you will now start making repayments on the new loan at the 4 percent rate.
Even a small rate reduction leads to noticeable savings. For example, on a 500,000 dollar home loan, reducing your rate by 1 percent can save you around 3,600 dollars a year. The exact amount depends on your loan size and repayment structure, but smaller rate drops still add up over time.
What’s driving the surge in refinancing trends?
Refinancing has become the leading trend in the mortgage market, with 35.98% of total mortgage enquiries in August 2025 coming from refinancing applications.. This marks a 34.9% increase compared to the previous year.
The primary driver of this refinancing surge is the RBA’s interest rate cuts in 2025, with reductions occurring in February, May, and August. These cuts have made it easier for homeowners to refinance and take advantage of the competitive interest rates.
Additionally, new mortgage originations declined by 1.7% year-over-year in August, as lower property listings contributed to slower new loan applications. Meanwhile, refinancing is thriving, making it a more attractive option for existing homeowners
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Why now is the best time to refinance your home?
Refinancing your home loan now could be a beneficial financial move. Here are some key reasons why:
- Lower interest rates: Refinancing gives you the flexibility to adjust your loan terms. You could switch from a variable rate to a fixed rate for stability, or adjust the loan term to either shorten the time to pay off the loan or reduce monthly payments.
- Better loan terms: Refinancing gives you the flexibility to adjust your loan terms. You could switch from a variable rate to a fixed rate for stability, or adjust the loan term to either shorten the time to pay off the loan or reduce monthly payments.
- Improved cash flow: By securing a competitive interest rate or extending your loan term, refinancing can lower your monthly repayments. This extra cash flow can be redirected toward other financial goals, like investing or saving for future needs.
- Debt consolidation: Refinancing allows you to consolidate high-interest debts such as credit card balances or personal loans, into your mortgage at a lower interest rate, simplifying repayments and saving on interest.
- Access to home equity: If your home has increased in value, refinancing can allow you to tap into your home equity for other needs, such as renovations, investments, or funding large expenses. You might consider unlocking home equity to access the funds you need.
- Lender competition: The current market is competitive, with lenders offering attractive deals like cashback offers, discounted rates, and more flexible terms. Now’s a good time to shop around and secure a better deal.
Refinancing isn’t just about saving money today; it’s about setting yourself up for better financial flexibility in the future.
Need your home loan refinancing approved quicker?
Learn the best refinancing strategies to speed up your approval process in our blog post.
What to look for when comparing refinancing home loan options?
When you start comparing loans for refinancing, it is easy to get drawn in by low interest rates and bold advertising. However, the cheapest rate on paper is not always the best choice for your situation. Here are key things to keep in mind:
- Hidden fees: Application fees, settlement costs, annual fees, and early repayment penalties can quickly reduce the savings you expect from refinancing. Always review the full cost of the loan.
- Loan features: A lower rate may come with fewer features. Check whether the loan includes an offset account, redraw facility, or flexible repayment options. The right features can help you save more over time.
- Introductory rates: Some loans promote a very low starting rate that increases significantly after the introductory period. Make sure you understand the long-term rate and repayment amount.
- The fine print: Terms and conditions can influence how beneficial a loan really is. Before committing, review the details carefully so you are not surprised later.
Refinancing your home loan should support your financial goals rather than simply offering short-term savings. Choosing the right structure is just as important as choosing the right rate.
Offset accounts vs. redraw facilities – what’s the difference?
Get insights into these loan features and how they can save you money in our blog post.
How does ZedPlus make refinancing easy for you?
Comparing loans online can give you a general idea of what is available, but it rarely shows which option fits your financial situation. At ZedPlus we provide guidance that is personalised and based on a complete understanding of your goals.
Here is how we support you through the refinancing process:
- Understanding your goals: We take the time to understand your income, future plans, and lifestyle, so we can recommend a refinancing option that supports your long-term objectives.
- Wide lender access: We work with 40+ lenders, giving you access to competitive rates, flexible features, and loan options that you may not find on comparison websites.
- Negotiation support: We negotiate directly with lenders on your behalf. This helps us secure better rates, better conditions, and a smoother approval process.
- Managing the process: From your initial review to settlement, we manage the entire refinancing process. We handle the paperwork, monitor progress, and make sure everything stays on track.
- Ongoing support: We continue to review your loan over time to ensure it remains suitable as your circumstances change. Our support does not end after settlement.
Working with us makes the refinancing process easier. Our goal is to help you choose a loan that suits your needs today and supports your financial goals in the future
Ready to refinance? Contact us today to discuss your options.
Refinancing FAQs
1. What is the difference between internal and external refinancing? How does ZedPlus help?
Internal refinancing refers to refinancing with your current lender, often with the aim of retaining existing customers and offering them better rates or terms. This option is typically quicker and less complex. On the other hand, external refinancing involves switching to a new lender to secure potentially better loan terms, lower interest rates, or more flexible features.
While internal refinancing has grown in popularity due to lenders' retention efforts, external refinancing may offer more competitive deals if you are willing to shop around. At ZedPlus, we help you navigate both options and choose the one that best aligns with your financial goals.
2. How has refinancing helped with the rise in investor loans in Australia?
Refinancing has contributed to the rise in investor loans by offering investors opportunities to lock in lower interest rates, consolidate debt, and access home equity. As investor lending increases, especially in markets like Victoria where affordability remains relatively favorable, refinancing enables investors to reduce costs and improve their cash flow, which in turn supports continued investment in properties.
3. Is refinancing an option for first-home buyers?
Refinancing isn't an option for first-home buyers, as there’s no existing mortgage to refinance. However, first-home buyers can take advantage of other government schemes, like the Australian Government 5% Deposit Scheme which helps them enter the market with a smaller deposit of just 5% without needing to pay Lenders Mortgage Insurance (LMI).
Additionally, single parents can access the scheme with as little as a 2% deposit. The scheme now has unlimited places, no income caps, and higher property price caps to support a wider range of buyers. This makes homeownership more accessible, helping many Australians get their foot in the door sooner, even without the need for a large deposit.
4. What is the 80/20 rule in refinancing?
The 80/20 rule in refinancing refers to the idea that 80% of your loan balance should be covered by a standard mortgage, and 20% should be covered by other forms of debt or equity. This concept can help homeowners manage loan-to-value ratios (LVR) and secure better terms on refinancing options.
Final thoughts
We hope this article has provided valuable insights into the rising trend of refinancing in Australia and how it could benefit you. If you are now considering refinancing, our loan experts are here to guide you through the process with personalized advice tailored to your financial goals. At ZedPlus, we help you explore the best refinancing options to suit your needs. Contact us today to learn how we can help you secure a competitive mortgage interest rate and achieve greater financial flexibility.
