switching-home-loans.jpegIf home loan repayments are weighing heavily on your monthly budget, it could be a sign that it's time to switch your mortgage. 

Signing a decades-long home loan agreement doesn’t mean you’re stuck with your current lender or mortgage product, and switching home loans – typically called refinancing – can better align your finances with your lifestyle.

Changing home loans doesn’t have to be a complicated or expensive process. In fact, it can often lead to substantial savings, sometimes amounting to thousands – or even tens of thousands – of dollars.

Whether you're after lower monthly payments, better loan features, or you’re just curious about your options, our comprehensive guide walks you through when and how to switch your home loan effectively, ensuring you make a move that aligns perfectly with your financial goals.

Some of the best home loan deals for borrowers eager to change

Here are some of the top home loans on the market right now for homeowners looking to switch.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured Online ExclusiveUp to $4k cashback
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
5.94% p.a.
5.95% p.a.
Principal & Interest
5.95% p.a.
5.95% p.a.
Principal & Interest
5.99% p.a.
5.90% p.a.
Principal & Interest
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

Making the switch: How to upgrade your home loan 

Few Australians can genuinely claim their financial situation is the same today as it was 10, 20, or 30 years ago. So, it hardly makes sense that an Aussie would cling to the same home loan product for all that time.

By regularly reviewing and potentially switching their mortgage, a homeowner can ensure they’re getting only the best deal available to them at any given time.

After all, the mortgage market can shift as fast as a person’s financial lifestyle, and new market leading lenders emerge all the time.

But that’s not to say you have to wait years to change a mortgage. Borrowers can swap products as soon as it suits them – whether that’s days, weeks, or years after taking on a home loan.

See also: Ultimate guide to refinancing your home loan

Changing home loans could mean moving from one product in a lender’s arsenal to another. It might also mean moving your mortgage from your current lender to a new home loan provider.

However, a person considering shaking up their mortgage should carefully weigh the cost of doing so against the benefits of a better home loan fit.

What to consider before changing home loans 

The decision to switch your mortgage is a significant one that can lead to considerable savings and a more manageable budget. However, not every refinancing story is a happy one.

A person considering changing their home loan should take the time to brainstorm what they like about their current mortgage and what they would like to change so as to ensure that, if they move, they do so to a product more suited to them.

Perhaps you’d like to make more extra repayments than your current lender allows, or you’d like to access an offset account, for instance.

Changing your home loan or lender could see you relishing in:

  1. Lower monthly repayments

  2. A reduced loan term

  3. A switch from a variable rate to a fixed rate or vice versa, or

  4. Access to additional helpful loan features

You might find that making the switch offers you multiple benefits, perhaps even all of those listed! 

Assess your current financial situation

A good way to start a brainstorm session is by considering your current financial status. 

Do you have income stability? Are your debt levels manageable? What are your future financial prospects?

The answers to these questions and more might help you determine whether now is a good time to switch home loan products. 

You might also begin your home loan switching journey by asking your current bank or lender whether they can do better for you. The worst thing they could say is ‘no’, and they might even fulfil your mortgage desires there and then.

Understand the equity in your home

Equity is a major factor to consider before starting down the mortgage-switching path.

The more equity you have in your home – that is, the more of it that you own outright – the better the conditions you're likely to receive on a new loan. 

Typically, having at least 20% equity in your home is advisable before considering switching loan products, as that can help you avoid paying Lenders Mortgage Insurance (LMI).

On top of that, moving your home loan to a new product or lender could allow you to remortgage some of your equity, potentially giving you access to more liquid cash.

Evaluate interest rates

Interest rates are a driving factor in the decision to change home loans, particularly after the Reserve Bank of Australia began hiking the cash rate in 2022

Switching to a mortgage with a lower interest rate could reduce a borrower’s monthly repayments. It could also save them thousands of dollars of interest.

Take Joe, for example

He recently switched from a $600,000, 30-year home loan with a 6.50% p.a. interest rate to another with a 6.00% p.a. interest rate. 

Swapping loan products allowed him to save $195 a month. But that’s pocket change compared to his long-term savings.

Over the life of his loan, that seemingly small difference would see him saving more than $70,000 in interest. Now he can afford that luxury round-the-world cruise he has always dreamed off!

See also: Mortgage repayment calculator

However, a person contemplating changing their home loan should also pay attention to a lender’s advertised comparison rate. The comparison rate takes into account both a product’s interest rate and any fees charged to borrowers. 

Thus, a home loan with a low interest rate and a high comparison rate probably has notable fees that could negate potential savings. 

Consider the length of your remaining loan

Refinancing can also extend or reduce the total length of your loan. 

If you've held your current mortgage for several years, refinancing to a new 30-year loan might lower your monthly repayments but it could increase the time it takes to pay it off, thereby upping the total amount of interest you pay over the life of the loan.

Alternatively, switching to a shorter-term loan, like a 15-year mortgage, could increase monthly payments but significantly decrease the total interest paid.

Think big

Perhaps the most important thing to consider before switching home loans is what your future will hold. 

For instance, if you plan to move houses in a few years, the cost of refinancing may not be worth the short-term savings. 

That’s right, switching home loans isn't free, and we’ll lay out the common costs momentarily. 

For now, it’s worth making sure your break-even point – the point at which you save more as a result of changing home loans than you paid to do so – comes around before you plan to sell your home.

How to identify a great home loan to switch to 

Now that you've pinpointed what you're missing with your current mortgage, it might be time to compare home loans and find a better fit. If your existing home loan isn't ticking all the boxes, switching to a new product or lender could be a smart move.

But where do you start?

Explore your options

Visit Your Mortgage to compare thousands of home loan products.

Whether you're looking to cut your interest rate, find a loan with more usable features, or even switch to a lender that offers greater security, you're only a few clicks away from finding a plethora of options that might better suit your needs.

Focus on features 

You’ve considered what specific features will enhance your financial well-being, now it's time to find mortgage products that offer them.

If having an account that can both house your savings and offset your interest expense sounds appealing, you might wish to compare loans that offer an offset account

Or maybe you prefer the reliability and familiarity of banking with one of the big four; you can specifically compare their mortgage products to find the best deal.

Seek professional guidance

Still feeling a bit lost? A mortgage broker’s help could be invaluable. 

They have the expertise to navigate the complex market and find a loan that fits just right. 

Keep in mind, though, brokers often have agreements with certain lenders, so they might not be able to offer loans from the entire market.

What fees are involved with switching mortgages? 

As mentioned above, switching home loans isn’t free. In fact, it can come at a hefty cost, and it's important that the cost is carefully weighed against the potential benefits. 

Typically, a person who has changed their mortgage product can expect to be out of pocket for at least a few months after doing so as they wait for their amassed savings to outweigh the expense of switching home loans.

Some of the common fees that might be associated with changing your mortgage include: 


Why it’s charged

Application fee

This fee covers the cost of processing your new mortgage application.

Valuation fee 

Lenders often require a property valuation to determine the loan amount they will offer and they may charge a borrower the cost of a professional appraiser.

Break fee

If your current mortgage has a fixed-rate and you want to switch to a new one before the end of your fixed term, your current lender may charge a break fee to compensate for the interest payments they will miss out on.

Exit fee 

This fee covers the administrative costs a bank might incur while closing your existing mortgage.

Settlement fee

This fee is charged to set up the new mortgage, including registering the new lender's interest in a property.

Now you’re ready to switch home loans!

Switching your home loan can be a financially rewarding strategy if done at the right time and for the right reasons. 

Before taking the leap, assess your current financial situation, understand the potential costs involved, and consider your long-term housing plans. 

A carefully considered switch could save you thousands in interest, reduce your repayment term, or offer more suitable loan features for your lifestyle. 

Ready to find a better deal? Explore your options today, and take control of your financial future. 

Remember, a thoughtful approach to switching your home loan ensures that the benefits will outweigh the costs, setting you up for a more secure and prosperous financial future.

Photo by Jason Briscoe on Unsplash