How Much Can I Save by Refinancing My Mortgage?

Most homeowners in Mandurah and Perth sit on their original home loan for years without checking what else is available.

The answer to how much you could save depends on three main factors: the difference between your current rate and what's available now, how much you still owe, and whether your property value has increased enough to access more favourable lending terms. For someone with a $500,000 loan who's stuck on a rate that's even 0.5% higher than current variable rates, that's around $2,500 a year in extra interest.

When Your Fixed Rate Period Is Ending

Coming off a fixed rate is one of the most common moments to review your loan. Most lenders will automatically roll you onto their standard variable rate, which is often higher than what new customers or refinancers can access.

Consider someone in Halls Head who fixed their rate three years ago at 2.3% on a $600,000 loan. Their fixed rate period is ending and the lender's revert rate sits at around 6.2%. Staying with that lender without action means their repayments jump from around $2,400 to roughly $3,700 per month. If they refinance to a variable rate closer to 5.9%, they're looking at monthly repayments around $3,580 instead. That's $120 a month or $1,440 annually just by switching lenders. Over five years, that's more than $7,000 in interest saved, and that's before factoring in any rate drops that might occur on the variable product.

If you're approaching the end of a fixed term, it's worth reviewing your options at least three months beforehand. The refinancing process typically takes four to six weeks, so starting early means you can switch lenders on the day your fixed rate expires without any break costs.

The Hidden Cost of Staying with Your Current Lender

Lenders reward new customers and refinancers more than they reward loyalty. Someone who took out a home loan in Mandurah five years ago and has made every repayment on time is often paying more than someone who just refinanced to that same lender last month.

Property values across greater Perth have shifted over the past few years. If you bought in Lakelands or Golden Bay when prices were lower, your equity position has likely improved. That improved equity can unlock access to lower interest rates because lenders view you as lower risk when your loan-to-value ratio drops. A homeowner who bought for $450,000 with a 10% deposit now has a property worth $550,000 and owes $380,000. Their loan-to-value ratio has moved from 90% to around 69%, which often opens the door to rate discounts that weren't available at purchase.

What Else Changes When You Refinance

Saving on your interest rate is the most obvious benefit, but refinancing can also improve your loan features. Many older home loans don't include offset accounts or flexible redraw options. An offset account linked to your mortgage means any money sitting in that account reduces the interest you're charged daily.

In our experience, clients who consolidate credit card debt or personal loans into their mortgage often see their monthly cashflow improve significantly. If you're paying 12% to 20% interest on credit cards and consolidate that into a mortgage at under 6%, the interest savings are substantial. A $30,000 credit card balance costs around $500 a month in interest alone. Roll that into your mortgage and it might add $180 to your monthly repayment, but you're now paying off the principal instead of just servicing high-interest debt. The debt consolidation strategy works particularly well for homeowners who've built up equity and want to simplify their finances.

How Much Equity You Can Access Matters

If you're looking to release equity for an investment property, renovations, or another purpose, refinancing lets you unlock that value without selling. Lenders will typically allow you to borrow up to 80% of your property's current value without needing to pay lenders mortgage insurance again.

Someone in Rockingham who bought for $400,000 and now has a property valued at $520,000 with $300,000 still owing could access around $116,000 in usable equity. That's $520,000 multiplied by 80%, minus the existing $300,000 loan. If they want to use that equity as a deposit on an investment property, refinancing is how they access those funds. The interest rate they secure on the refinance also affects how much cash they can pull out while keeping repayments manageable.

Should You Switch to Fixed or Variable?

Whether to lock in a fixed rate or move to variable depends on where you think rates are heading and how much certainty you need in your budget. Variable rates move with the market, so if the Reserve Bank cuts rates, your repayments drop. Fixed rates give you certainty for one to five years, but you'll pay break costs if you need to exit early.

Many borrowers split their loan, fixing part for security and keeping part variable for flexibility. That way, if rates fall, you still benefit on the variable portion. If rates rise, you've got protection on the fixed side. The decision depends on your risk tolerance and financial situation. A loan health check helps you weigh up which structure suits your circumstances.

How the Refinance Process Affects Your Savings

Switching lenders involves a property valuation, a credit check, and a new loan application. Most lenders will cover valuation costs as part of their refinance offer, but it's worth confirming upfront. Application fees vary, and some lenders waive them entirely to attract refinancers.

The time it takes to refinance is usually four to six weeks from application to settlement. During that period, you'll need to provide proof of income, confirm your expenses, and allow the lender to assess your borrowing capacity. If your financial situation has improved since you first bought, such as a pay rise or reduced living costs, you might qualify for a larger loan or access to premium rate discounts that weren't available before. Understanding your borrowing capacity upfront helps set realistic expectations for what's possible.

Refinancing saves you money when the rate reduction, improved features, or equity access outweighs the cost and effort of switching. For most homeowners who haven't reviewed their loan in two or more years, the savings are worth it. Call one of our team or book an appointment at a time that works for you to see what your current loan is really costing you.

Frequently Asked Questions