Your home may have increased in value. What could that mean for your mortgage?
Australia has experienced significant property-price growth.
In Western Australia for example, REIWA reported that Perth’s median house sale price rose by 16.3% during the 2025–26 financial year to $930,000.
For homeowners, an increase in property value can mean an increase in equity, particularly where the mortgage balance has either reduced or remained the same.
That equity may provide an opportunity to refinance. But refinancing does not have only one purpose.
Reasons you might refinance your mortgage
Depending on your circumstances, you might refinance to:
- Reduce your interest rate
- Lower your monthly repayments
- Repay the mortgage sooner
- Access equity for renovations
- Contribute towards another property
- Consolidate eligible debts
- Add an offset account
- Change from a fixed to variable loan
- Split the loan between fixed and variable rates
- Change repayment frequency
- Move away from an unsuitable lender or product
The right option depends on what you are trying to achieve. Let’s look at a few options and the numbers associated with those options.
One Click Life Mortgage CalculatorsOption 1: Refinance without accessing equity
Some homeowners only want a better deal on their existing mortgage. This could be for two reasons;
- Reduce mortgage repayments, or
- Pay the mortgage off faster.
Let’s take a look at the numbers with an analysis of a borrower with:
- A $550,000 home loan
- 28 years remaining (interest rate in this example is 6.48%)
- Monthly repayments of $3,551
Let’s assume this borrower wants to reduce mortgage repayments to assist with the cost of living increases we’ve all experienced recently.
Example 1: Refinance to reduce mortgage repayments
| Current mortgage | Proposed mortgage | |
| Loan balance | $550,000 | $550,225 |
| Additional cash released | $0 | $0 |
| Remaining term | 28 years | 28 years |
| Monthly repayment | $3,551 | $3,433 |
| Estimated monthly reduction | — | $118 |
| Estimated saving over term | — | $39,714 |
This is a real-life example of a refinance with the same remaining term and unlocking a reduced monthly repayment to $3,433. That was an estimated reduction of $118 per month and an estimated saving of $39,714 over the proposed loan term.
In this example if the borrower kept repayments the same ($3,551 per month) the loan could be paid off 27 months earlier with a resulting saving of $98,234.
This type of refinance may suit someone whose main objective is to reduce the cost of their mortgage without increasing their borrowing.
Note; Only $225 in mortgage registration costs was included in the refinance analysis, taking the proposed loan amount to $550,225. No additional funds were requested.
Option 2: Refinance and access some equity
Another reason to refinance would be to unlock some equity. This could be for renovations, or a variety of other reasons. Let’s consider the above example, but in this case access $10,000 for furniture and paying off a personal loan.
We’ll use the same existing loan balance of $550,000 but included a request for additional funds. The proposed loan will be $560,225, comprising the refinanced mortgage, additional borrowing and a $225 mortgage registration cost. The borrower would receive $10,000 in cash to spend as they desire.
Despite the larger loan balance, the estimated repayment reduced from $3,551 to $3,496 per month. The estimated saving over the unchanged 28 year term would be $18,480.
Example 2: Refinance with equity release
| Current mortgage | Proposed mortgage | |
| Loan balance | $550,000 | $560,225 |
| Equity cash out | — | $10,000 |
| Remaining term | 28 years | 28 years |
| Monthly repayment | $3,551 | $3,496 |
| Estimated monthly reduction | — | $55 |
This example demonstrates how a sufficiently improved lending offer can potentially allow a borrower to access some equity while also reducing mortgage repayments.
It should not be interpreted as a promise that increasing a loan will normally reduce repayments. Outcomes vary according to the rate, loan term, fees and lender assessment.
What is the difference between the two options?
Looking at the two options side by side shows two ways to reduce mortgage repayments. One just reducing mortgage repayments and the other also achieving an equity release to contribute towards renovations.
| Example 1 | Example 2 | |
| Existing loan | $550,000 | $550,000 |
| Proposed loan | $550,225 | $560,225 |
| Net funds released | $0 | $10,000 |
| Proposed repayment | $3,433 | $3,496 |
| Savings over term of loan | $39,714 | $18,480 |
| Main objective | Reduce loan cost | Reduce loan cost and access equity |
Although the projected repayment and term saving are the same in both reports, the second borrower carries a higher principal balance. The additional funds are not free money—they must be repaid with interest.
One Click Life Mortgage CalculatorsSeven common reasons to refinance your mortgage
1. Secure a more competitive interest rate
Even a relatively small rate reduction can make a meaningful difference on a large loan balance.
Moneysmart notes that small differences in home-loan rates can materially affect the long-term cost of a mortgage. The true benefit should be assessed after fees and over an appropriate period.
2. Reduce monthly repayments
Lower repayments can improve monthly cash flow.
This may be helpful where household costs have increased or where the homeowner wants to redirect money towards savings, an offset account or other priorities.
Tip: make sure the reduction comes from a better rate—not merely from extending the mortgage for many more years.
3. Pay the home loan off sooner
Refinancing does not need to mean paying less each month.
A borrower may refinance to a lower rate but maintain or increase their existing repayment. The additional amount reduces principal faster, subject to the loan’s terms.
This will reduce both the loan term and total interest paid on the loan.
4. Renovate or improve the property
Equity may be used for renovations such as:
- A kitchen or bathroom
- An additional bedroom
- Outdoor improvements
- Energy-efficiency upgrades, or
- Necessary repairs.
5. Purchase an investment property
Available equity could contribute towards the deposit and costs for an investment property.
This strategy increases leverage and financial risk. The borrower must be able to manage the loans if rates rise, expenses increase or the investment property is vacant.
Tax advice may be required, particularly when structuring loan splits and the cash flow impacts of holding an investment property with recent budget changes.
6. Consolidate eligible debts
Refinancing may allow some debts to be combined with the home loan.
This can simplify repayments and reduce the immediate interest rate, but there are important risks:
- The debt becomes secured against the home
- The repayment period could become much longer
- Total interest may increase
- Credit cards may be used again after being cleared
Tip: A clear plan to repay the consolidated portion over a shorter period can help prevent a short-term debt becoming a decades-long mortgage expense.
7. Obtain better loan features
The interest rate is only one part of a home loan.
A borrower may value:
- A full offset account
- Flexible additional repayments
- Redraw access
- Multiple loan splits
- Weekly or fortnightly repayments
- Better digital banking
- More suitable fixed-rate options
- Improved customer service
Features can be valuable, but they should not be paid for unnecessarily.
How much usable equity might you have?
The basic calculation for home equity is:
Property (home) value − existing mortgage = home equity
For example:
| Amount | |
| Estimated property value | $900,000 |
| Existing mortgage | $550,000 |
| Total estimated equity | $350,000 |
However, usable equity is normally lower than total equity.
At an illustrative maximum Loan to Value Ratio (LVR) of 80%:
- 80% of $900,000 = $720,000
- Less existing mortgage of $550,000
- Indicative usable equity = $170,000 before costs
This does not mean the lender will approve another $170,000. The borrower must still meet servicing, credit and lending requirements.
One Click Life MortgagesThe risks of refinancing
Refinancing costs
Potential costs can include:
- Discharge fees
- Mortgage registration fees
- Application or settlement fees
- Valuation fees
- Fixed-rate break costs
- Government charges
- Annual package fees
- Lenders mortgage insurance
Warning: Borrowers with less than 20% equity may incur lenders mortgage insurance when changing loans.
Other considerations
Property values can change
Recent growth does not guarantee future growth. A market downturn could reduce equity and increase the borrower’s LVR.
Approval is not based on equity alone
A lender may decline an application even where substantial equity exists. Income, expenses, debts, credit conduct, loan purpose and serviceability remain important.
Should you refinance with your existing lender or switch?
Your options may include:
- Asking the current lender for a better rate
- Repricing or changing products with the current lender
- Refinancing to another lender
- Refinancing and accessing equity
- Refinancing while maintaining the current loan term
- Refinancing to a shorter term
- Remaining with the current loan where switching costs outweigh the benefit
A mortgage broker can compare available options and, when providing credit assistance, must comply with the mortgage-broker best-interests duty.
A refinancing checklist
Before making a decision to refinance, review the below list. A mortgage broker can assist in preparing and assessing options.
- Your current loan balance
- Your interest rate and comparison rate
- The remaining loan term
- Current monthly repayments
- Fixed-rate expiry or break costs
- Your property’s estimated value
- Your estimated LVR
- Available offset or redraw funds
- The purpose of any additional borrowing
- All exit and entry costs
- The new loan’s features
- The repayment at a higher interest rate
- The time required to recover switching costs
- The total interest over the proposed term
Australian property values have changed significantly. Your home loan may deserve another look. Speak with the One Click Life mortgage team for a personalised refinancing and equity review.
BOOK AN APPOINTMENTGeneral information disclaimer:
This content is general information only and does not take into account your objectives, financial situation or needs. Refinancing and accessing equity may increase your debt and total interest costs. Your home may be at risk if repayments cannot be made. Lending criteria, valuations, fees and eligibility requirements apply. The case studies are illustrative estimates and do not represent guaranteed loan offers or savings.
