Refinancing — moving your mortgage to a new lender, or restructuring it with your current one — can be a smart financial move. But it isn't free, and the right decision depends on your numbers. Here's how to think about it in 2026.
Why homeowners refinance
Common reasons include:
- A better interest rate or a more competitive lender
- Debt consolidation — rolling higher-interest debt into your mortgage to lower overall repayments
- Accessing equity for renovations, investment or other goals
- Cash contributions — some lenders offer a lump-sum incentive to switch
- Restructuring — changing your fixed/floating split or repayment setup to suit your situation
The costs to factor in
Before you switch, weigh the benefit against the costs:
- Break fees. If you're part-way through a fixed term, breaking it early can trigger a break cost — sometimes substantial, depending on how rates have moved since you fixed.
- Legal fees for the refinance.
- Cash contribution clawbacks. If you received a cash incentive from your current lender, leaving within the agreed period (often three to four years) usually means repaying some or all of it.
- Low-equity premiums if your equity is under 20%.
The rule of thumb: refinancing makes sense when the long-term saving comfortably outweighs the upfront cost.
The 2026 backdrop
With the Official Cash Rate holding at 2.25% and competitive one-year fixed rates in the high-4% range, many homeowners who fixed at higher rates a couple of years ago are now rolling onto noticeably lower rates. That makes it a sensible time to review — but remember that for many people, simply re-fixing with their existing bank (rather than fully refinancing to a new one) is the simpler option and avoids some of the costs above.
Refinance vs re-fix — what's the difference?
- Re-fixing means choosing a new fixed rate with your current lender when your term expires. It's quick and usually free.
- Refinancing means moving to a new lender, which can unlock a better rate or a cash contribution, but involves legal work and potential clawbacks.
Often the best result comes from using a competing lender's offer to make sure your current bank is giving you a fair deal.
How to decide
Start by getting clear on three numbers: the rate (and cash offer) you could move to, the total cost of switching, and how long you plan to keep the loan. If you'd like, we can run those numbers with you and compare lenders — including checking whether re-fixing is the smarter move.
This article is general information only and is current as at June 2026. It is not personalised financial advice and does not take your individual circumstances into account. Break costs, clawbacks, lending criteria and interest rates vary and can change at any time. Please seek advice from a licensed financial adviser before making any decisions.