Should You Refinance Your Home Loan in 2026? How to Know and How Much You Could Save

If you haven’t reviewed your home loan in the past 12–24 months, there’s a strong chance you’re paying more than you need to.

Many Australians assume their bank will automatically keep their rate competitive, but in reality, lenders often reserve their best rates for new customers. This means loyal customers can quietly end up on higher rates over time.

Refinancing allows you to move your loan to a better structure, negotiate a lower interest rate, reduce your repayments, or access equity to achieve your next financial goal.

In 2026, refinancing has become one of the most effective ways homeowners can improve their financial position without increasing their income.

What Does Refinancing Actually Mean?

Refinancing simply means replacing your current home loan with a new one, either with a different lender or your existing lender.

The new loan pays out your existing loan, and from that point forward, you make repayments under the new structure.

Homeowners refinance for several reasons, including:

• Reducing their interest rate

• Lowering monthly repayments

• Accessing equity for investment or personal use

• Consolidating debts

• Switching from variable to fixed or fixed to variable

• Moving to a lender with better features

Refinancing is not just about chasing a lower rate. It’s about ensuring your loan still aligns with your current financial position and future plans.

How Much Could You Actually Save?

Even a small rate reduction can have a significant impact.

For example:

If you have a $600,000 loan over 30 years:

• At 6.74%, repayments are approximately $3,890 per month

• At 6.14%, repayments drop to approximately $3,650 per month

That’s a saving of $240 per month, or $2,880 per year.

Over time, this adds up to tens of thousands of dollars.

Many homeowners are surprised to learn how much their rate has drifted compared to what’s available today.

Signs It Might Be Time to Refinance

Many people don’t realise when their loan is no longer competitive. Here are the most common indicators:

Your fixed rate has expired

This is when many loans revert to a much higher variable rate.

Your interest rate is above current market rates

Even a difference of 0.50% can mean thousands per year.

Your financial position has improved

Higher income, reduced debts, or increased property value can unlock better options.

You want to reduce your repayments

Refinancing can restructure your loan to improve cash flow.

You want to access equity

This allows you to use your property's value to invest or achieve other financial goals.

Accessing Equity Through Refinancing

One of the most powerful benefits of refinancing is accessing equity.

Equity is the difference between your property’s value and your remaining loan balance.

For example:

• Property value: $900,000

• Loan balance: $500,000

• Equity: $400,000

A portion of this equity can be accessed and used for:

• Purchasing an investment property

• Renovations

• Debt consolidation

• Business purposes

This allows homeowners to grow their wealth without selling their current property.

Why Many Homeowners Stay With the Wrong Loan

The most common reason people don’t refinance is simply because they assume it’s difficult or unnecessary.

In reality, the process is straightforward when managed properly.

Banks also rely on customer inertia. Existing customers often don’t receive the same competitive pricing offered to new borrowers.

Reviewing your loan regularly ensures you’re not overpaying unnecessarily.

The Refinancing Process Explained

Refinancing is simpler than most people expect.

The process typically involves:

Step 1: Reviewing your current loan

Your interest rate, loan balance, and structure are assessed.

Step 2: Comparing suitable lenders

Options are reviewed based on your financial position and goals.

Step 3: Submitting the application

This includes income documents, identification, and property details.

Step 4: Property valuation

The lender confirms the property's current market value.

Step 5: Loan approval and settlement

The new loan replaces the existing one.

From start to finish, this process typically takes 2–4 weeks.

When Refinancing May Not Be Suitable

Refinancing is beneficial in most cases, but not always.

It may not be suitable if:

• Your loan balance is very small

• You plan to sell soon

• The cost outweighs the benefit

• Your financial position has significantly declined

This is why proper assessment is important before making a decision.

Real Example: Reducing Repayments and Improving Cash Flow

A recent client approached Zahr Financial after noticing their repayments had increased significantly.

They had been with their existing lender for several years and had never reviewed their rate.

After reviewing their position, we refinanced their loan to a more competitive rate and improved their loan structure.

The result:

• Lower monthly repayments

• Improved cash flow

• Access to equity for future investment

The process was completed smoothly, and the client is now in a much stronger financial position.

Why Reviewing Your Loan Regularly Is Important

Your home loan should evolve with your financial position.

As your income grows, property value increases, and lending policies change, better opportunities become available.

Many homeowners review their insurance annually but forget to review their mortgage, even though it’s usually their largest financial commitment.

A simple review can often uncover opportunities to improve your position.

How Zahr Financial Can Help

At Zahr Financial, we specialise in helping homeowners refinance strategically, not just to chase lower rates, but to improve their overall financial position.

This includes:

• Reducing repayments

• Negotiating better interest rates

• Accessing equity

• Restructuring loans for future investment

• Improving cash flow

Every situation is assessed individually to ensure the right structure is recommended.

Find Out If Refinancing Makes Sense for You

If you haven’t reviewed your home loan recently, it may be worth understanding what options are available.

Even a small improvement can make a significant difference over time.