Refinance Home Loan Rates Melbourne: How to Save More on Your Mortgage

Interest rates have changed fast in recent years, and many Melbourne homeowners are now paying far more than they need to. Whether your fixed rate is expiring or your variable rate has crept up, refinancing could offer real savings, if you know how to compare your options.

But refinancing isn’t just about chasing the lowest number. It’s about understanding your loan structure, how fees work, and what lenders are willing to offer based on your equity and repayment history.

In this guide, we’ll break down how to compare refinance home loan rates in Melbourne, how it relates to construction financing, and how to refinance the right way without unnecessary costs or confusion.

Why Refinance at All?

If you’ve had your current loan for more than two years, chances are your rate isn’t the most competitive anymore. Most lenders reserve their sharpest rates for new customers, not existing ones.

Refinancing can help you:

●     Lock in a lower interest rate

●     Reduce monthly repayments

●     Access equity for renovations or investment

●     Switch to a more flexible loan product

●     Consolidate other debts into your home loan

It’s also a good time to review your overall loan strategy, especially if you’re thinking about building, renovating, or upgrading in the near future.

What Are the Current Refinance Rates in Melbourne?

As of mid-2025, refinance home loan rates in Melbourne generally sit around:

●     Fixed rates: 5.79% – 6.29%

●     Variable rates: 5.89% – 6.49%

●     Cashback offers: up to $2,000 with select lenders

These rates can vary depending on your:

●     Loan-to-value ratio (LVR)

●     Credit score and repayment history

●     Employment status

●     Loan size and product type (e.g. offset or basic)

Some lenders also offer sharper rates for borrowers who are refinancing and have more than 20% equity.

When Is the Right Time to Refinance?

Timing matters more than most people realise. Here are signs that refinancing could be worth it:

●     Your fixed rate is about to expire

●     You’ve built at least 20% equity in your property

●     Your repayments have jumped significantly in the past 12 months

●     You want to access cash for construction or upgrades

●     You’re planning to build and want to restructure your loan in advance

Many homeowners refinance once they finish their build or major renovation, especially if they want to shift from an interest-only construction phase to a long-term principal and interest loan.

Can You Refinance into a Construction Loan?

Yes, and this is where Melbourne home construction financing becomes relevant.

If you're planning to build a new home or knock down and rebuild, refinancing may help you:

●     Access equity to cover part of the build

●     Combine land and construction finance into one

●     Secure a better post-build rate with a new lender

●     Adjust your loan structure to suit progress payments

This type of refinance requires more planning, especially around valuations and builder contracts, but it’s a powerful strategy if you’re upgrading.

Fixed vs. Variable When Refinancing

Here’s a simple way to compare:

Fixed refinance rate:

●     Predictable repayments

●     Often slightly lower than variable

●     Break fees apply if you exit early

Variable refinance rate:

●     More flexibility (extra repayments, redraws)

●     Rate may go up or down

●     Suitable if you plan to pay off faster or sell

You can also split your loan, fixing part and keeping part variable, to balance certainty and flexibility.

What to Watch Out for When Refinancing

Some of the most common refinance traps include:

●     Hidden fees: discharge fees, application fees, valuation costs

●     Short-term offers: cashback that disappears with higher long-term rates

●     Not comparing properly: focusing on rate only, not the loan features

●     Delays in switching: causing missed rate lock opportunities

That’s why it’s helpful to work with a mortgage broker who can run real calculations, not just compare headline rates.

How Equity Plays a Role

Equity is the difference between your property’s value and what you owe on your loan. The more equity you have, the better your refinance options.

●     80% LVR or lower: Access to the best refinance rates, no LMI

●     Above 80%: Still possible to refinance, but may require lender’s mortgage insurance

●     High equity: Can unlock funds for building, renovating, or even purchasing an investment property

If your property has increased in value since you bought it, now might be the perfect time to refinance and take advantage of that equity.

What If You're Self-Employed?

Melbourne has a growing population of self-employed borrowers, especially in trades, consulting, and small business. Refinancing is still very possible, but you’ll need to:

●     Show your income through BAS or tax returns

●     Have a good record of repayments on your current loan

●     Demonstrate ongoing business activity

Some lenders specialise in self-employed refinancing, even if you’ve been operating for under two years.

How to Get Started with Refinancing

Here’s a simple roadmap to follow:

1. Check your current rate and repayment history

   
   
   
   

2. Request a valuation or estimate your equity

   
   
   
   

3. Speak with a broker to compare your options

   
   
   
   

4. Apply with your chosen lender (with help, if needed)

   
   
   
   

5. Complete discharge and settlement of your old loan

   
   
   
   

You don’t need to figure it all out alone. At Loan Easy, we guide homeowners step-by-step through the refinance process and help you secure a better deal, without the paperwork headaches.

Conclusion: Melbourne Homeowners Can Do Better

If you're still on an old loan, chances are you're paying more than you need to. With interest rates shifting and lender competition heating up, now is the time to review your loan, access better features, and reduce monthly repayments.

A smart refinance could free up cash for your next build, help you budget better, or simply give you more control.

Want to refinance into a better rate with less stress? Talk to Loan Easy about refinancing your Melbourne home loan today.