14 May 2025 Home Loan Refinancing Explained: Guide for Melbourne Homeowners
Home loan refinancing means replacing your current mortgage with a new one that better fits your needs. It can help lower your interest rate, cut monthly repayments, or unlock equity from your property.
In Melbourne’s current market, where values have risen across many suburbs, refinancing can be a smart financial move.
EverLend’s Melbourne mortgage brokers help homeowners refinance to lower repayments, access equity, or switch to a better loan. They compare lenders, handle the application, and manage everything through to settlement, saving you time and maximising long-term savings.
In this guide, we’ll explain what home loan refinancing is, how it works, and what Melbourne homeowners should know before making the switch.
What Is Home Loan Refinancing?
Home loan refinancing is when you replace your current home loan with a new one, usually with better terms. The new loan pays out the old one, and you continue making repayments under the new agreement.
The goal is simple: improve your financial position. That might mean locking in a lower interest rate, reducing your monthly repayments, switching between fixed and variable rate options, or accessing equity built up in your home.
In Melbourne, refinancing has become increasingly popular as property values have risen across many suburbs. This rise means homeowners often have more equity available than they realise.
Whether you’re in established areas like Kew or growth corridors like Tarneit, that equity can be put to better use, like renovations, investing, or consolidating debts.
Refinancing also appeals to those who feel stuck with their current lender, or who signed a loan years ago when rates and options were far less competitive. Today’s loan products are more flexible and tailored, making refinancing a practical choice for many Melbourne households.
Melbourne Property Market Outlook for 2025
Melbourne’s property market is expected to grow steadily through 2025, driven by population growth, housing demand, and infrastructure development.
According to Domain’s March 2025 Forecast, house prices in Melbourne are projected to rise by 4% to 6% across the year, particularly in middle-ring suburbs such as Preston, Coburg, and Glen Waverley (Domain).
CoreLogic’s national home value index also shows Melbourne housing prices have already increased 1.5% in the first quarter of 2025, indicating a solid recovery after previous softening periods (CoreLogic Australia).
The Reserve Bank of Australia (RBA) has kept the cash rate stable so far in 2025, with most analysts predicting moderate movement later in the year. This stable environment supports refinancing opportunities while rates are relatively low.
Benefits of Refinancing
With rising home values, many Melbourne homeowners have more equity in their properties. Refinancing allows them to:
- Tap into that equity for renovations or investments
- Switch from outdated loan terms to more competitive options
- Lower monthly repayments while home values remain strong
- Consolidate high-interest debts into a single, manageable loan
In short, 2025 presents a window of opportunity for Melbourne homeowners to reassess their current loan and potentially improve their financial situation.
How Home Loan Refinancing Works
Many Melbourne homeowners consider refinancing but aren’t quite sure what the process actually involves. Let’s break it down with a real-world example to show how it works in practice.
Refinancing starts when you apply for a new home loan, either with your current lender or a different one. If approved, that new loan pays off your existing mortgage.
From that point on, you make repayments on the new loan based on its updated terms. These might include a lower interest rate, a longer or shorter loan term, or different loan features like offset accounts or redraw options.
Sample Scenario:
Emma owns a home in Glenroy that’s now valued at $800,000. She has $420,000 remaining on her current home loan, which is locked in at an interest rate of 6.2%. She decides to refinance and is approved for a new loan at a 5.4% interest rate, with the same remaining loan term of 25 years.
By switching to the lower rate, Emma reduces her monthly repayments from around $2,784 to approximately $2,495. That’s a monthly saving of about $289, or $3,468 per year. Over time, these savings really add up, especially when combined with features like the ability to make extra repayments or use an offset account.
The process involves submitting a loan refinance application, a credit assessment, property valuation, and covering one-off costs like application fees and discharge fees. But for many, the long-term financial benefit far outweighs the upfront costs.
Ready to Refinance? Chat with EverLend
Thinking about refinancing your home loan? Our Melbourne mortgage brokers at EverLend are here to help. Whether you’re looking to lower your repayments, access equity, or simply get a better deal, we’ll guide you every step of the way. Call us on 03 7036 3356 visit everlend.com.au to book a chat.
How to Refinance a Home Loan
Refinancing can be a smart financial move, but only if you understand the full process, including the costs. Here’s a clear breakdown of each step so you can make informed decisions and avoid surprises along the way.
Step 1: Review your current loan
Start by checking your current interest rate, loan repayments, and remaining loan amounts. Look at your loan statements and recent bank statements to assess whether your existing terms still match your needs or if better loan options are available.
Step 2: Check your credit score and financial health
Your credit score plays a major role in determining your eligibility for a new loan and the loan interest rates you’re offered. Paying down credit card debt and personal loans can improve your credit history and boost your chance of approval.
Step 3: Compare lenders, loan products, and costs
Use comparison tools or work with a mortgage broker to evaluate current interest rate offers from different lenders. Don’t just focus on the advertised rate—review the comparison rates, rate period, fixed vs. variable interest rates, and whether the offers apply to eligible home loans.
Be sure to factor in one-off costs like discharge fees, valuation fees, and application fees. These can vary depending on the lender and the type of loan. Your broker will help you assess whether the savings from a competitive rate outweigh the upfront refinancing costs.
Step 4: Choose the right competitive rate home loan
Decide whether a fixed or variable rate home loan works best for your situation. A mortgage broker can explain the pros and cons of each, helping you lock in a competitive interest rate based on your financial goals and regular repayment capacity.
Step 5: Submit your loan application
With the help of your broker, complete the loan application and gather the necessary documents. These usually include proof of income, recent bank statements, and details of any personal loans or credit card debts—important for meeting credit approval criteria.
Step 6: Approval, settlement, and new repayments
After conditional approval, your lender will complete a property valuation and issue a formal loan offer. Once you accept, your new lender will pay off your existing loan, and you’ll begin repayments based on the new loan amounts and terms.
Keep in mind that switching loans may involve one-off charges like mortgage discharge fees and setup costs. But with the right broker and a strong understanding of the true cost, refinancing can still lead to lower loan repayments and long-term savings.
Chat with EverLend today
If you’re a Melbourne homeowner thinking about refinancing, now’s the time to explore your options. Our experienced Melbourne mortgage brokers know the local market inside out and can help you find the right loan, faster, smarter, and with fewer headaches.
Whether you want to lower repayments, access equity, or just see if there’s a better deal out there, we’re here to help. Call us at 03 7036 3356 for a free consultation or chat with our broker today.
Frequently Asked Questions (FAQs)
What are the rules for refinancing a mortgage?
The refinancing process involves a new loan application process, updated loan documents, and a credit check. Some rules include meeting the lender’s criteria, paying any exit fees from your initial loan, and possibly paying Lenders Mortgage Insurance if your equity is below 20%.
What’s the downside to refinancing?
Refinancing can trigger extra costs like loan approval fees, loan break costs, and other loan fees that may outweigh the potential savings if you’re not careful. It also restarts the loan term, and if you don’t get the right loan deal, you could end up paying more in the long run.
How to get equity out of your home without refinancing in Australia?
You can access equity through secured loans such as a line of credit or by using your property as collateral for additional funds. However, this still involves a credit check, application process, and financial advice to ensure it’s right for your loan types and financial situation.
When should you refinance a home loan?
Refinancing is worth considering when you have a good credit score, lower loan rates are available, or you want to switch to a fixed-rate home loan or a variable rate loan with more flexible repayment options. It’s also a good time if you plan to fund renovations, consolidate debts, or invest in investment properties using your equity.
Is it a good idea to refinance a home loan?
It can be a smart move if the potential savings from a better loan deal outweigh the exit fees, loan break costs, and other extra fees. Always review your outstanding loan balance, current loan details, and seek professional advice from loan experts or mortgage brokers to understand if it fits your individual circumstances.
Final Thoughts
Refinancing your home loan in 2025 could be one of the simplest ways to save money, unlock equity, or get loan features that actually suit your lifestyle. Whether you’re in the inner suburbs or out in the growth areas of greater Melbourne, it pays to review your options—especially with the right team beside you.
At EverLend, our mortgage brokers are based in St Kilda and work with homeowners all across Melbourne. We’ll break down the numbers, explain the fine print, and help you decide if refinancing is the right fit.
Book a free consultation today; no pressure, just real advice from locals who get it. Chat with us here or call 03 7036 3356 to get started.