How to Refinance Your Mortgage in Melbourne — Step by Step

If your home loan is more than a year or two old, there's a decent chance you could be on a rate that's no longer competitive. Lenders regularly offer their sharpest rates to attract new customers, which means loyal borrowers often end up paying more than they should.

Refinancing is simply the process of replacing your current home loan with a new one — either with a different lender or sometimes even with your existing lender (through a "rate match" or product switch).

Here's exactly how the process works, step by step.

Step 1: Figure Out Where You Stand

Before anything else, you need to understand your current position:

• What rate are you currently paying? (Check your most recent loan statement)
• What's your remaining loan balance?
• Are you on a fixed or variable rate? (If fixed, when does it expire? Breaking a fixed rate early can incur significant costs.)
• What's your property's approximate current value? (This determines your loan-to-value ratio, or LVR)

A mortgage broker can review all of this for you in a complimentary initial assessment.

Step 2: Compare Your Options

This is where a broker earns their keep. Instead of approaching banks one by one, a broker compares options across their entire lender panel. At Mocha Finance, that's 40+ lenders.

We look at:

• Interest rates (both variable and fixed)
• Comparison rates (which include fees)
• Loan features (offset accounts, redraw, extra repayments)
• Cashback offers (some lenders offer cashback to refinancers)
• Any switching costs vs. potential savings

Step 3: Crunch the Numbers

Not every refinance makes financial sense. A good broker will model the full picture:

• Monthly savings: How much less will you pay per month?
• Switching costs: Discharge fees from your current lender, application fees with the new lender, any government fees
• Break-even point: How many months until the savings outweigh the costs?
• Total savings over the life of the loan

If the numbers don't stack up, an honest broker will tell you.

Step 4: Apply for the New Loan

Once you've chosen a lender and product, the application process is similar to your original home loan:

• Provide identification documents
• Supply income evidence (payslips, tax returns for self-employed)
• Provide bank statements
• The lender will order a property valuation (usually at no cost for refinances)
• The lender assesses and approves your application

Your broker manages all of this, including chasing up conditions and coordinating between old and new lenders.

Step 5: Settlement

Settlement is the day your new lender pays out your old loan. This is handled between the lenders' solicitors and typically takes 1-2 weeks after unconditional approval. You don't need to attend — it all happens behind the scenes.

From that day forward, your repayments go to your new lender at your new (hopefully lower) rate.

How Long Does Refinancing Take?

From initial enquiry to settlement, refinancing typically takes 3 to 6 weeks, depending on:

• How quickly you can provide documents
• The lender's processing times
• The complexity of your situation

Common Refinancing Mistakes to Avoid

1. Only looking at the interest rate — Compare the full package, including fees, features, and flexibility
2. Forgetting about exit costs — Check discharge fees and any break costs on fixed loans
3. Extending your loan term — Refinancing to a new 30-year term resets the clock. Consider keeping your remaining term or shortening it.
4. Not comparing properly — Going directly to one bank means you only see one product. A broker shows you the whole market.

Is Refinancing Right for You?

Refinancing may be worth exploring if:

• Your current rate is significantly above today's market rates
• Your fixed rate period is ending soon
• You want to access equity for renovations or investment
• You want to consolidate debts
• Your financial situation has improved since your original application

Not sure? We can do a quick, no-obligation check for you. Start your free enquiry → or call Michael on 0477 979 377.

Michael Gross is a Credit Representative (546597) of LMG Broker Services Pty Ltd (ACN 632 405 504, Australian Credit Licence 517192). Information is general in nature and does not constitute financial advice.