Written by

Steven Lee

Mortgage Director, ODIN Mortgage & Tax

10+ years in Australian banking and mortgage lending

Last reviewed

Updated on: June 10, 2026 View profile →

Rate-and-Term Refinancing for Your Australian Home Loan

Are you feeling stuck with your current home loan? Maybe the interest rate feels too high, or the repayment schedule no longer suits your life. Many Aussie homeowners are actively looking for ways to manage their mortgage costs, with refinancing activity showing significant interest in recent quarters.

One of the most common and practical ways to do this is through rate-and-term refinancing.

This type of refinance doesn’t add to your debt or tap into your home’s equity. Let’s break down how it works, when it makes sense, and whether it’s the right option for your situation.

What Is Rate-and-Term Refinancing?

Rate-and-term refinancing means updating your mortgage terms, like switching to a lower interest rate or changing the loan duration, without taking out extra cash from your equity.

You don’t add new debt. You just replace your existing loan with a better one.

This type of refinance focuses on cost-saving, convenience, or a better loan structure. It’s also commonly known as a no-cash-out refinance or mortgage restructuring.

Refinance Without Cash Out

A key characteristic of rate-and-term refinancing is a refinance without cash out. This means you don’t receive any extra funds when you take out the new loan. The new loan amount is simply the outstanding balance of your existing mortgage, plus any applicable refinancing costs.

This distinguishes it from other types of refinancing, where you might borrow more than what you currently owe. The focus here is purely on altering the interest rate and/or the repayment period.

How It Differs from Other Refinance Types

It doesn’t increase your loan amount. Unlike cash-out refinancing, rate-and-term refinancing doesn’t involve accessing your home equity or borrowing more. It simply restructures your loan.
It doesn’t combine other debts. Unlike debt consolidation, you’re not merging personal loans or credit card balances—just adjusting the terms of your current mortgage.
It usually means switching lenders. While you might negotiate better terms with your current lender, rate-and-term refinancing often involves refinancing through a different lender to secure a more favourable rate or term.

👉 Check out the other common Types of Refinance in Australia.

Why Consider Rate-and-Term Refinancing in Australia?

Refinancing your home loan for better terms, without pulling equity, can help you control your finances more effectively.

Especially with interest rates shifting, many homeowners are looking to update loan terms without adding debt. Here’s how a rate-and-term refinance could benefit you:

Securing a Lower Mortgage Interest Rate

Interest rates vary over time in the property market. If your current rate is higher than today’s offerings, you may benefit from a reduced interest rate refinance.

Example: Even a small reduction in your interest rate can translate to substantial savings over the long term. For example, a 1% lower rate on a $600,000 loan could save you over $100,000 in interest over 30 years.

👉 Always check comparison rates, not just advertised rates, to know your true cost.

Adjusting Your Loan Term: Shorten or Extend Mortgage Repayment Term?

Refinancing lets you reset your mortgage term.

Shorten Your Loan Term: Switch from 30 to 20 years to pay off your home faster.
Extend Your Loan Term: Move from 15 to 25 years to reduce monthly repayments.

Keep in mind that extending the term reduces monthly pressure but may increase your total interest over time.

👉 Check out: Does Refinancing Affect Your Credit Score in Australia?

Switch Between Fixed and Variable Rates

A rate-and-term refinance allows you to switch between a fixed-rate and variable-rate home loan, depending on your financial goals and the current interest rate outlook.

Switching to a fixed rate means your repayments stay the same for a set time. It’s a good option if rates are going up and you want stability.
Switching to a variable rate gives you more flexibility. If rates go down, your repayments might drop too, helping you save money.

This flexibility is one of the key reasons many homeowners choose to refinance. It lets you align your loan with changing market conditions or changes in your personal situation.

👉 Check out: Can You Refinance a Fixed Loan? Fixed Rate Mortgage Refinance

Updating Home Loan Terms for Better Features

A rate-and-term refinance isn’t just about changing numbers—it’s a chance to upgrade your loan features, too. You might refinance to access:

Offset accounts
Redraw facilities
Flexible repayment options

If these weren’t available or appealing when you first got your home loan, adding them now can give you more control and savings over time.

Potential Savings on Your Home Loan

You don’t need to pull equity to start saving.

You could save thousands each year by simply lowering your interest rate, shortening your loan term, or accessing better features like offset or redraw. Even a 0.5% drop in your rate can make a significant impact over time.

Rate-and-term refinancing helps reduce overall interest costs and gives you more control, without tapping into your equity.

Rate-and-Term Refinancing vs. Other Options

Rate-and-Term vs. Cash-In Refinancing

Cash in refinancing includes adding your own funds to reduce the loan balance.

Either rate and term vs cash in refinancing could be the right choice depending on your situation.

Rate-and-Term vs. Cash-Out Refinancing

Rate-and-term refinancing focuses purely on changing your interest rate or loan term—nothing more. In contrast, cash-out refinancing lets you borrow more than your current loan and take the extra as cash.

While cash-out increases your loan balance, rate-and-term is about improving efficiency without adding new debt.

Rate-and-Term vs. Debt Consolidation Refinancing

Debt consolidation refinancing combines other debts, like credit cards or personal loans, into your home loan. This can simplify your repayments, but it often increases your loan balance.

Rate-and-term refinancing, on the other hand, keeps your mortgage separate. No added debts, just a smarter way to manage your existing home loan.

👉See: Rate-and-Term Refinance vs Debt Consolidation

Rate-and-Term vs. Renegotiating with Your Current Lender

Renegotiating involves updating your loan terms with your current lender—no switching needed. It can reduce fees, but might not offer the most competitive rate on the market.

Comparing lenders is key—what feels easier isn’t always the better deal.

It’s easy to confuse rate-and-term refinancing with other types of refinancing in Australia. Here’s a simple breakdown of how they differ.

👉 Also see:

AU Expats—Reset Your Mortgage Without Touching Your Equity

The Step-by-Step Process for Rate-and-Term Refinancing

Here’s a simple step-by-step guide to help you confidently navigate a rate-and-term refinance.

Check Your Eligibility

Before approving a rate-and-term refinance, check the key factors lenders will assess:

Your Income: They want to see that you can comfortably manage the new loan repayments. If you’re an Aussie expat, some lenders accept overseas income, too.
Your Credit History: This shows how reliably you’ve handled debt in the past. A strong history of on-time payments improves your chances of approval and a better rate.
Your Equity: Most lenders prefer that you own at least 20% of your home’s value, meaning your loan-to-value ratio (LVR) is 80% or less.

Gather Required Documents

You’ll need the following documents for rate-and-term refinance process:

Proof of income (payslips, tax returns)
Current mortgage statements
ID and property documents

👉 Need a full list? Check our home loan refi documents checklist.

Apply for Your New Home Loan

Once you’ve picked a lender, submit your refi application. You may need to complete a valuation, even for a no-cash-out refinance.

The Approval and Settlement Timeline

Approval usually takes 5 to 20 business days. After that, settlement happens within 1 to 2 weeks.

Costs and Fees Associated with Rate-and-Term Refinancing

Even if you’re not withdrawing equity, refinancing isn’t free. Here are the key costs to keep in mind.

Discharge and Application Fees

Your current lender may charge a discharge fee. New lenders may charge application or valuation fees. These range from $200 to $700, depending on the bank. Some lenders waive these to attract customers.

Potential Government Charges like Stamp Duty

In most states, stamp duty is not charged when refinancing. However, fees may apply if property ownership changes. Confirm with your state revenue office.

Break Costs for Fixed Rate Loans

Exiting a fixed-rate loan early may trigger break costs (e.g., 1 to 4% of your loan balance). Calculate if long-term savings outweigh these fees. Speak with your lender or broker to calculate the cost.

👉 Check out: How Much Does It Cost to Refinance a Home Loan?

Is Rate-and-Term Refinancing Right for Your Situation?

It depends on your goals for refinancing. Ask these questions before selecting a rate-and-term refinance.

Calculate the Benefits

Before moving forward, it’s important to compare your current loan with the new offer.

Look at:

Interest Rate: Is the new rate lower?
Loan Term: Are you shortening or extending it?
Monthly Repayments: Will they go down or up?
Total Interest Over Time: Are you saving overall?

Even if your monthly repayments change slightly, you might save thousands in interest over the life of the loan. Use a refinance calculator or speak with a broker to see the full picture.

Consider the Impact on Your Credit Score

Multiple loan applications in a short period can lower your credit score. Space out applications or use pre-approvals to minimise impacts. However, long-term savings may outweigh minor impacts.

When is the Right Time to Refinance Your Rate and Term?

Refinancing can be a strong move, but timing matters. Ideal times to revise your rate and term include:

When interest rates are low
When your financial situation has improved
When your current mortgage doesn’t suit you anymore (e.g., planning retirement)

👉 Also see: Should I Refinance My Mortgage After RBA Rate Cuts?

Rate-and-Term Refinancing Considerations for Australian Expats

If you live overseas, refinancing can feel complex. Expats face stricter criteria, like higher deposit requirements (often 30–40%) and currency risk.

However, some lenders accept expat income, offer digital applications, and specialise in refinancing home loan services for expats.

Seek advice from mortgage brokers familiar with expat scenarios. With their support, you can find specialist lenders that cater to expats. Make sure the lender understands your residency, income currency, and time zone needs.

AU Expats— Refinance Smart, Not Hard

Key Takeaways

Rate-and-term refinancing helps lower your rate or adjust loan terms without drawing equity.⬆️
Use it to reduce interest rates, shorten/extend repayment terms, or access better features.⬆️
Rate-and-term refi is different from cash-out or debt consolidation refinancing.⬆️
Compare costs (e.g., break fees) against potential savings before switching lenders.⬆️
Aussie expats can access tailored refinance home loan options with the right lender.⬆️

Rate-and-Term Refinancing for Your Australian Home Loan