If you took out a home loan in the last few years and have not reviewed it recently, there is a good chance you are paying more than you need to. With the Reserve Bank of Australia cutting interest rates in 2025 and lenders competing aggressively for business, 2026 could be one of the best windows in recent years to refinance your Perth home loan and secure a better deal.
But refinancing is not right for every borrower in every situation. This guide explains what refinancing actually involves, when it makes financial sense, what to watch out for, and how to work out whether switching is the right move for you right now.
What Is Refinancing and Why Do People Do It?
Refinancing simply means replacing your existing home loan with a new one, either with your current lender or a different one. The goal is usually to achieve at least one of the following: a lower interest rate, reduced monthly repayments, access to the equity you have built in your property, consolidation of other debts, or better loan features such as an offset account or redraw facility.
For many Perth homeowners, refinancing is one of the most powerful tools available for improving their financial position without selling their property. Even a modest reduction in interest rate can translate to thousands of dollars saved over the remaining life of a loan.
What Has Changed in the Rate Environment?
After a sustained period of rate increases from 2022 through to 2024, the Reserve Bank of Australia began cutting the official cash rate in 2025. This has created a more competitive lending environment, with lenders reducing both variable and fixed rates to attract new business.
As a result, many borrowers who locked in higher rates during the peak period, or who have simply stayed on their original loan without reviewing it, may now find that significantly more competitive options are available. Refinancing activity across Australia surged in 2025, with investor and owner-occupier borrowers both actively reviewing their loans.
How Much Could You Save by Refinancing?
The savings from refinancing depend on your current rate, the new rate you can access, your remaining loan balance, and the loan term. To give a sense of the potential impact: on a $600,000 loan with 25 years remaining, reducing your interest rate by just 0.5% could save approximately $170 per month or over $2,000 per year in repayments.
On a $750,000 loan, the same rate reduction would save around $215 per month, or more than $2,500 per year. Over a 25-year loan term, the cumulative interest savings can be substantial.
Use our Mortgage Switching Calculator to get a personalised estimate of the potential savings based on your current loan details.
When Does Refinancing Make Sense?
Refinancing is generally worth considering when your current interest rate is noticeably higher than what is currently available in the market, when your financial position has improved since you took out your original loan, when you have built up equity and want to access it for renovations or investment, when you want to consolidate higher-interest debts into your mortgage at a lower rate, or when your fixed rate period is coming to an end and you are rolling onto a variable rate.
The sweet spot for most borrowers is when the rate saving is large enough to recover the costs of switching within a reasonable period of time typically within one to two years.
When Does Refinancing NOT Make Sense?
Refinancing is not always the right answer, and it is important to go in with a clear understanding of the potential downsides.
If you are on a fixed rate loan, you may face break costs for exiting early. These can sometimes amount to thousands of dollars and wipe out any rate saving in the short term. It is essential to understand your break cost before proceeding.
If your property value has fallen since you purchased, or if you have not yet built significant equity, you may find that lenders classify your loan as higher risk and charge LMI again on a refinance. This would significantly reduce the financial benefit of switching.
Refinancing also resets the clock on your loan in some cases. If you have been paying off your mortgage for several years and refinance to a new 30-year term, your total interest bill over the life of the loan may actually increase even if your monthly repayments go down. A broker can help you structure the refinance to avoid this outcome.
What Costs Are Involved in Refinancing?
Refinancing is not cost-free, and understanding the exit and entry costs is essential to working out whether a switch is worthwhile. Common costs include discharge fees from your current lender (typically $150 to $400), settlement fees on the new loan ($200 to $500), government fees for discharging and registering the mortgage (approximately $300 to $500 in WA), and potential valuation fees from the new lender.
If you are on a fixed rate, break costs can be far higher and need to be confirmed with your current lender before making any decisions.
In many cases, lenders will offer cashback deals or fee waivers to attract refinancers, which can offset or eliminate some of these costs. A broker can identify which lenders are currently offering the most competitive refinance packages.
Accessing Equity Through Refinancing
Refinancing is also commonly used to access equity the difference between your property’s current value and your outstanding loan balance. With Perth property values rising strongly over the past few years, many homeowners now have significant equity available.
Equity can be accessed through a cash-out refinance or by establishing a home equity loan or line of credit. Common uses include funding home renovations, contributing to an investment property purchase, consolidating higher-interest debts, or building a financial buffer.
If you are considering using equity for investment, our team can explain how this works alongside our investment property loan options.
How to Know If You Are Getting a Competitive Rate
The simplest way to find out whether your current rate is competitive is to have a mortgage broker review your loan against what is currently available in the market. This costs you nothing and takes very little of your time.
If your lender has not proactively offered you a rate reduction in the current environment, that does not mean you are on a competitive deal. Lenders often reserve their best rates for new customers, leaving loyal existing borrowers at higher rates. This is commonly referred to as the loyalty tax.
You can also use our Loan Comparison Calculator to compare your current loan against alternatives, but speaking with a broker gives you access to actual lender pricing rather than advertised rates.
How Long Does Refinancing Take?
A straightforward refinance typically takes between two and six weeks from application to settlement, depending on the lender’s processing times and how quickly your documents are submitted. Working with a broker who manages the process on your behalf generally speeds things up, as they know exactly what each lender requires and can keep the application moving.
Is 2026 a Good Time to Refinance in Perth?
For most borrowers who have not reviewed their loan in the past 12 to 24 months, the answer is yes it is worth at the very least finding out what is available. The combination of rate cuts, lender competition, and rising Perth property values creating accessible equity makes 2026 a genuinely favourable environment for refinancers.
The best way to know for certain is to speak with an experienced mortgage broker who can review your current loan, compare it against the market, and give you a clear picture of whether switching makes financial sense for your specific situation.
Frequently Asked Questions
How often should I review my home loan?
Most mortgage brokers recommend reviewing your home loan at least once every two years, or whenever there is a significant change in the market such as a series of rate cuts. Your financial situation also changes over time, and a loan that was right for you three years ago may no longer be the most suitable option available.
Will refinancing affect my credit score?
A refinance application involves a credit check, which will appear on your credit file. A single enquiry has a minimal impact on your score. However, submitting multiple applications to different lenders in a short period can have a more noticeable effect. A mortgage broker submits a single application to the most suitable lender, avoiding the need for multiple credit checks.
Can I refinance if I am self-employed?
Yes, self-employed borrowers can refinance, though the documentation requirements are more detailed than for salaried employees. Lenders typically require two years of tax returns and financial statements. Some lenders are more accommodating of self-employed applicants than others, which is another area where working with a broker can make a significant difference.
What is a cashback refinance offer and is it worth taking?
Some lenders offer cash payments of $2,000 to $4,000 to borrowers who refinance to them. While a cashback offer can be attractive, it should not be the primary reason to choose a lender. A loan with a slightly lower interest rate will often save you far more over the life of the loan than a one-off cashback payment. Always compare the full financial picture, not just the headline incentive.
Can I refinance to a shorter loan term?
Yes, and this can be a powerful strategy for borrowers whose financial position has improved. Refinancing to a shorter term for example, from 25 years remaining down to 20 years increases your monthly repayments but reduces the total interest you pay over the life of the loan significantly. A broker can model different term options and help you find the right balance between repayment comfort and total interest cost.
Find Out If Refinancing Could Save You Money
Our team at Central Lending Solutions reviews your current loan, compares it against the market, and tells you plainly whether switching makes sense at no cost to you. With over 20 years of experience helping Perth homeowners get better deals, we know which lenders are genuinely competitive right now. Book a free loan review today.