Can I Refinance My Home Loan With the Same Bank?
Thinking about refinancing but don’t want the hassle of switching banks? You’re not alone. Many homeowners wonder, “Can I refinance my home loan with the same bank?”—and the short answer is yes.
Refinancing with your current lender, also known as an internal refinance, can offer a faster, more convenient path to better loan terms without the disruption of moving your mortgage elsewhere. But just because it’s easier doesn’t always mean it’s the best financial choice.
In this article, we break down the pros, cons, key considerations, and step-by-step process to help you refinance your Australian home loan with your current lender.
Should I Refinance My Mortgage With the Same Bank?
You may consider refinancing with the same bank for several reasons, including prior positive experiences with the lender, convenience, or a simpler process. It’s crucial to understand both the potential advantages and disadvantages before making a decision.
Pros of Refinancing With the Same Lender
Before jumping ship to another lender, it’s worth considering the potential upsides of staying put. Refinancing with your current lender can offer a smoother, quicker, and sometimes more rewarding experience—especially if you’re already in good standing. Here are some key advantages:
Streamlined Application Process
Refinancing your home loan with the same lender can streamline the application process, as the lender already has your information on file and is familiar with your payment history.
While you may still need to update some financial documents, having your main information accessible by the lender can help the refinance process move along more smoothly.
Familiar and Convenient
If you choose to refinance with the same lender, you’re already acquainted with their payment process and how their system works. This choice can be easier for you than learning a new process with a different lender.
Potential for Faster Processing
Refinancing with the same lender may lead to faster processing times in some cases. Since the bank already has your information and payment history, they may be able to expedite certain stages of the refinance process, such as verifying your identity and assessing your creditworthiness.
However, it’s important to note that this isn’t always the case, and processing times can vary depending on the lender’s current workload and the complexity of your financial situation.
Less Paperwork
While you’ll still need to provide updated financial documentation to demonstrate your current circumstances, you may not need to resubmit identification documents and other information that hasn’t changed since your original application.
Possible Loyalty Perks or Discounts
Some banks may offer loyalty perks or discounts to existing customers who choose to refinance their home loans with them. These could include reduced lender fees, such as application or valuation fees, or a slightly lower interest rate to new customers. Inquire with your current lender about the benefits available to long-standing customers.
No Break Costs on Fixed Loans
If you currently have a fixed-rate home loan and are considering refinancing to a different product within the same lender, you may be able to avoid paying break costs.
When refinancing internally to a new loan product offered by the same bank, the bank may waive these costs, potentially resulting in significant savings. However, it’s crucial to confirm this with your lender, as policies can vary.
👉 Also see: Top-Up Loan vs Refinance in Australia
Cons of Refinancing With the Same Lender
That said, loyalty isn’t always the most rewarding path. Refinancing with your existing lender might mean missing out on more competitive offers elsewhere. Here are some important drawbacks to keep in mind:
Potentially Higher Interest Rates (Than Competitors)
Your current lender may offer interest rates that are higher than those available from competitors. Banks are businesses, and even if you are a loyal customer, they aren’t always incentivised to provide you with their absolute lowest rates without you actively seeking and comparing offers from other institutions.
By limiting your search to your existing lender, you may miss out on a more competitive interest rate from another bank, which could result in substantial savings over the life of your loan.
Limited Loan Features
Your existing lender may not offer the specific loan features or products that would best suit your current needs and refinancing goals. For example, you may be looking for a loan with a more comprehensive offset account facility, a more flexible redraw option, or different repayment terms than what your current bank provides in their refinance offerings.
By exploring other lenders, you gain access to a broader range of loan products with varying features that may be more advantageous for your particular circumstances. Refinancing to the wrong type of loan, even with your current lender, can be costly in the long run.
Not Receiving the Best Deal
Ultimately, by not shopping around and comparing offers from multiple lenders, you risk not receiving the best overall deal. Beyond just the interest rate, you can also compare other factors such as lender fees, application costs, valuation fees, and any special promotions or cashback offers that other banks may be providing to attract new customers.
New lenders often offer introductory rates or are willing to negotiate to secure your business. By solely relying on your current lender, you forgo the opportunity to leverage this competitive landscape to secure the most favourable terms.
👉 Check out: Rate-and-Term Refinancing for Your Australian Home Loan
👉 You can also check out and consider Repricing vs Refinancing Your Mortgage in Australia.
AU Expats - Considering Refinancing With Your Current Bank?
- Refinancing with the same lender can be simpler, but is it the best option for you?
- Whether you're looking to lower repayments, access equity, or just avoid the hassle of switching lenders, get expert advice tailored for Australian expats to make the right decision.
- Simplify your refinance today.
Considerations Before You Refinance With the Same Bank
Compare Options and Potential Refinancing Costs
Obtain quotes from at least two or three other financial institutions in Australia to get a clear understanding of the prevailing interest rates, fees, terms, and conditions available in the market. When comparing, ensure you factor in all potential costs associated with refinancing. This includes:
- Break fees that your existing lender may charge if you switch to a different institution (if applicable).
- Establishment fees or application fees for the new loan, regardless of whether it’s with your current bank or a new one.
- Switching fees if you are moving to a different lender.
- Valuation fees may be required by either your current lender or a new one to assess the current market value of your property.
- Legal fees that you may incur for the refinance process.
- Processing fees and any other miscellaneous charges.
Carefully calculate whether the potential savings in interest payments from a lower rate outweigh the upfront and ongoing costs associated with refinancing. Use refinancing calculators, many of which are available online, to help you determine the long-term financial impact of each option.
👉 Check out: Refinance Home Loan Offers in Australia
Check Features: Offset Accounts, Redraw Facilities, Flexibility
Beyond checking the interest rate, one of the important tips for refinancing your Australian mortgage is to analyse the features of the new loan offered by your lender. Some key features to inquire about include:
- Offset Account: An offset account is a transaction account linked to your loan. The balance offsets your loan amount, reducing the interest you pay. Compare whether it’s a full (100%) offset, if there are any monthly fees, and if you can link multiple accounts.
- Redraw Facility: Redraw facilities allow you to access extra repayments you have made. Check if it’s free, if there are minimum limits, or if delays apply. Some lenders restrict how and when you can redraw, which can be inconvenient.
- Flexible Repayment Options: Look for flexibility in making extra repayments, changing repayment frequency (e.g., weekly instead of monthly), and options such as repayment pauses during hardship. These features help manage your loan around life changes.
- Loan Portability: This feature allows you to transfer your loan to a new property without the need for refinancing. Handy if you’re planning to move. Ensure it’s available for your loan type and check for any associated fees.
- Debt Consolidation Features: If you want to roll credit card or personal loan debt into your mortgage, check if the lender allows this. Also, compare the amount of equity they will allow you to release and whether any restrictions apply, especially for expatriates.
Your current loan may lack features that you now need, and even if you stay with the same bank, ensure the new refinance product offers the functionality that will benefit you most.
Understand Interest Rates vs. Comparison Rates
When evaluating refinance options, it’s crucial to understand the difference between the advertised interest rate and the comparison rate.
The interest rate is the basic cost of borrowing money, expressed as a percentage per annum. The comparison rate, on the other hand, is designed to provide a more comprehensive understanding of the total cost of the loan. It includes the advertised interest rate plus fees and charges associated with the loan, such as application fees, valuation fees, and ongoing fees, calculated over the loan term.
The comparison rate can provide a more accurate representation of the true cost of the loan, enabling a more informed comparison between different lenders and loan products. Always pay attention to the comparison rate when making your assessment.
Access Long-Term Savings
While a slightly lower monthly repayment may seem appealing, don’t forget to consider the total interest paid over the life of the new loan, especially if you extend the loan term.
Ensure that any upfront costs associated with refinancing fees are outweighed by the potential savings in interest over the duration you plan to hold the loan.
If you’re nearing the end of your current loan term, the potential savings from refinancing may be minimal and not justify the associated costs. Use mortgage calculators to project your potential savings over various time frames.
👉 Check out: Will Refinancing Save Me Money?
Ensure the New Loan Meets Your Refinance Goals
Before proceeding with a refinance, clearly define your reasons and goals for it. Are you primarily looking for a lower interest rate to reduce your repayments and save on interest? Are you aiming to change your loan term? Are you looking to access some of the equity in your home for renovations? Or are you seeking to consolidate your debts into your mortgage for simplified repayments?
Once you have a clear understanding of your objectives, carefully assess whether the refinance offer from your current bank meets these needs.
👉 Check out: Benefits of Refinancing Your Australian Home Loan
Steps to Refinance Your Home Loan With Your Current Lender
1. Review Your Loan Terms
The first step is to thoroughly review the terms and conditions of your current home loan. Understand your current interest rate (both the standard rate and any introductory rates that may be expiring), repayment schedule, remaining loan term, and any fees or charges associated with your existing mortgage.
Identify what aspects of your current loan are no longer working for you and what you hope to achieve through refinancing.
2. Check Your Credit Score and Financial Situation
Your lender will reassess your ability to repay the new loan, so it’s essential to check your credit score and ensure your overall financial situation is in good standing. Obtain a copy of your credit report and address any potential errors or negative entries.
Gather all necessary financial documentation, including recent payslips, bank statements, tax returns, and details of any other outstanding debts you may have. Be prepared to provide information about your employment, income, and expenses.
👉 Check out: Does Refinancing Affect Your Credit Score in Australia?
3. Research Your Bank's Refinance Offerings
Contact your current bank’s refinance department or speak with your existing loan officer to inquire about their current refinance options and interest rates. Ask about any special programs or discounts available for existing customers.
Obtain detailed information about the different loan products they offer, their features, and the applicable fees and charges. Don’t hesitate to ask questions and seek clarification on any aspects you don’t fully understand.
4. Understand All Fees and Costs
Request a comprehensive breakdown of all the fees and costs associated with refinancing through your current lender. This should include application fees, valuation fees, legal fees (if applicable), processing fees, and any other administrative charges.
Understand when these fees are payable and whether any of them can be waived or negotiated. Compare these costs with the potential long-term savings you anticipate achieving through refinancing.
👉 Check out: How Much Does It Cost to Refinance a Home Loan?
5. Apply for Refinance
Once you have a good understanding of your current lender’s refinance options and have compared them to external offers, and you decide to proceed with your current bank, you will need to complete their refinance loan application.
You will likely need to provide the updated financial documentation you gathered earlier. Be prepared to undergo a credit check and potentially a property valuation, even if you are staying with the same lender.
6. Finalise and Close Your New Loan
If your refi application is approved, your lender will send you a new loan contract and mortgage documentation. Carefully review all the terms and conditions before signing. Ensure that the interest rate, repayment terms, loan features, and all associated fees are as agreed upon and meet your expectations.
If you are unsure about any aspect of the documents, it is advisable to seek independent legal advice. Once you have signed the documents, your current lender will organise the payout of your old loan and the establishment of your new mortgage. You will then receive confirmation of your new loan details and your new repayment schedule.
👉 Check out: Documents Required for Refinancing in Australia
Conclusion: Should You Refinance Internally?
Refinancing your home loan, whether with the same bank or a new lender, can be a strategic financial move that potentially saves money or helps achieve other financial goals.
However, it is crucial to avoid complacency and thoroughly compare the refinance offer from your current lender with those from other financial institutions. By researching and comparing interest rates, fees, loan features, and overall costs, you can ensure that you are securing the most competitive deal that aligns with your individual needs and financial objectives.
Don’t assume that your current lender will automatically offer you the best terms. Always be prepared to negotiate and to consider all available options before making a final decision.
Refinance Right, Even From Overseas
- Sticking with the same lender may save time, but could cost you in the long run.
- Whether you want to lower repayments, access equity, or keep things simple, we’ll help you compare. We help Aussie expats weigh internal vs. external refinance options to find the best fit.
- Get personalised refinance options.
Key Takeaways
- Refinancing your home loan with the same bank is possible and can be convenient, but it doesn’t guarantee the best deal.⬆️
- Potential benefits of internal refinancing include a streamlined application process, familiarity, and potentially faster.⬆️
- Risks include higher rates, fewer features, and missing out on better offers elsewhere.⬆️
- Always compare with 2–3 other lenders, reviewing rates, fees, features, and long-term savings.⬆️
- Do your homework and clarify your goals to make the best decision, whether you stay or switch.⬆️
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