Your home loan may have been competitive when you first took it out. That does not necessarily mean it will remain competitive for the life of the loan.
Interest rates change. Lenders adjust their pricing. New products enter the market. Your loan balance falls and, over time, the equity you hold in your home may increase. Yet many homeowners continue paying the rate attached to their loan without checking whether their existing lender could offer them something better.
That is where home loan repricing comes in.
What is home loan repricing?
Repricing is essentially asking your current lender to review the interest rate they are charging on your existing home loan. If the lender agrees, you may receive a lower rate without having to move your mortgage to another lender.
You are effectively asking: Is this still the most competitive rate you can offer me based on my loan and current circumstances?
Exactly how a repricing request works varies between lenders. Some lenders have specific pricing teams that assess requests. In other cases, a homeowner or their mortgage broker may speak directly with the lender and ask them to review the existing discount or rate.
The lender may consider factors such as:
- The size of the loan
- The amount of equity in the property
- Whether the loan is for an owner-occupied home or investment property
- The product type and its own pricing policies at the time
Importantly, asking for a better rate does not mean the lender has to provide one. The outcome could be a reduction, a small adjustment, or no change at all.
Refinancing should still be considered in the context of your whole loan, including its features, fees, remaining term and the alternatives available elsewhere.
This information is general in nature and does not take into account your individual circumstances. Tax outcomes depend on factors including the asset, ownership structure and individual taxpayer position. Some implementation details remain subject to final legislation and guidance. Seek professional tax advice before making decisions.
Repricing and refinancing are often discussed together, but they are not the same thing.
- Repricing generally involves staying with your existing lender and asking it to review the rate attached to your current loan.
- Refinancing involves replacing your existing home loan with another loan. That could involve moving to a different lender or, in some circumstances, making a more significant change to the loan with your existing lender.
That difference matters.
Refinancing can create opportunities to access a different product, restructure debt, change loan features or move to a lender offering more suitable terms. But it can also involve a new application, property valuation, credit assessment and costs such as discharge, application or settlement fees.
A repricing request can therefore be a useful place to start before deciding whether a full refinance is needed.
If your existing lender gives you a competitive offer and your current loan still suits your needs, staying where you are may make sense. If the lender will not move enough on the rate, that gives you a clearer reason to investigate alternatives.
When should you consider repricing?
There is no universal timetable requiring homeowners to ask for a pricing review every certain number of months.
What matters is that the loan is reviewed periodically rather than being allowed to run for years without checking whether it still makes sense.
There are several points when a review can be particularly useful:
- It’s been a while since you last checked. If you’ve held your home loan for some time and haven’t asked your lender to reconsider the rate, pricing may have shifted considerably since the loan was set up.
- You’ve seen lower rates advertised elsewhere. Advertised rates don’t always tell the full story, and not every rate will be available to every borrower. But if something catches your eye, it’s a reasonable prompt to check whether your own pricing is still competitive.
- Your equity position has changed. If you’ve paid down the loan or your property’s value has grown, your LVR may now sit in a different pricing range, which can open up better options.
How to reprice your home loan step by step
A good pricing review starts before you contact the lender.
Step 1: Understand the loan you already have
Start with the basics: your current interest rate, outstanding balance, remaining loan term and regular repayment. Check whether there are annual or monthly fees and identify the loan features you actually use.
For example, do you have an offset account? Do you make additional repayments? Do you use redraw? Is part of the loan fixed?
It’s difficult to judge whether a new rate is better if you do not understand what you are comparing it with.
This also helps prevent a common mistake: focusing entirely on the interest rate while overlooking features that are valuable to you.
Step 2: Work out your approximate equity position
Next, consider the relationship between your current loan balance and the property’s value.
You don’t need a formal valuation just to ask about repricing, but having a reasonable idea of your property’s current value can help you estimate your LVR. If you’ve owned the property for several years and paid down a substantial part of the loan, your equity position may be stronger than it was when the loan was first approved.
Keep in mind the lender may use its own valuation when assessing your LVR for pricing purposes, so treat your estimate as a starting point rather than a confirmed figure.
Step 3: Look at comparable home loans
Before asking your lender for a better deal, it helps to understand what other lenders are offering, for loans that are genuinely comparable to yours.
The emphasis here should be on comparable.
A headline rate for a borrower with a low LVR may not be relevant if your LVR is considerably higher. A basic loan without an offset account should not automatically be compared with a package that includes features you regularly use.
Likewise, owner-occupier, investor, principal-and-interest and interest-only loans can be priced differently.
It’s worth looking beyond the advertised interest rate too. Fees, loan features and any conditions attached to the offer all form part of the real comparison.
ASIC explains that a comparison rate factors in the interest rate and most fees and charges, making it another useful piece of information when comparing credit products. However, it does not include every possible cost or capture non-price features such as repayment flexibility.
The goal isn’t to find the smallest number online. It is to work out whether there are realistic alternatives that actually suit your circumstances.
Step 4: Ask your lender for a pricing review
Once you know where you stand, contact the lender and ask for the interest rate on your home loan to be reviewed.
Be clear that you are reviewing the competitiveness of your mortgage.
You can mention comparable rates you have identified, particularly where they are available for a similar type of borrower and loan.
If your equity position has improved, raise that too.
If you would prefer to have support reviewing the loan and working through the alternatives, you can chat to a UFinancial broker. They will negotiate with your lender and consider whether the available rate still makes sense alongside the broader market.
Step 5: Assess the offer in dollars, not just percentages
If your lender comes back with a lower rate, take the time to understand what it means for you.
A few questions worth asking: how much could it change your repayment? Approximately how much interest could it save over the next year? Are there any fees involved? Does anything else about the loan change?
It’s easy to look at a small percentage shift and assume it’s not worth much. A reduction from 6.50% to 6.30% is only 0.20 percentage points on paper, but on a substantial home loan, that difference can still add up.
The reverse is also true. A large-looking discount off a lender’s “standard variable rate” tells you very little if the rate you actually end up paying is still uncompetitive.
The number that matters is the rate and overall cost applying to your loan, not the size of the advertised discount.
Step 6: Compare repricing with refinancing
Once you know what your existing lender is prepared to offer, you’re in a better position to compare it against the alternative.
If the repriced loan is competitive, retains the features you need and avoids unnecessary switching costs, staying with your current lender may make sense.
If there is still a significant difference between your lender’s offer and suitable alternatives, refinancing is worth considering.
But the benefits of refinancing should outweigh the costs involved in switching. It’s also worth being careful not to unnecessarily extend the loan term, as this can mean paying more interest over time, even when the new rate is lower.
Repricing your existing loan generally avoids that particular issue because you are not restarting the mortgage term from scratch.
Repricing starts with asking the question
Home loan repricing gives homeowners an opportunity to ask their existing lender whether the rate they are paying still reflects the loan they hold today.
Perhaps your equity position has improved. Perhaps your lender’s pricing has changed. Perhaps competing loans have become more attractive. Or perhaps your existing rate is already competitive.
You will not know until you review it.
The benefit of repricing is that it allows you to have that conversation before assuming a complete refinance is required. If the lender makes a competitive offer, you may be able to reduce your interest cost while keeping a loan that already works for you. If it does not, you then have a clearer basis for comparing other options.
If it has been some time since your home loan was reviewed, chat to a UFinancial broker about your current rate and loan structure. We can help you understand what your existing lender may be prepared to offer and compare that with other lending options so you can decide what makes sense for you.
This article contains general information only and does not take into account your personal financial circumstances. Lending criteria, rates, fees and repricing decisions vary between lenders and can change.
Frequently asked questions about repricing
What if the lender says no to your repricing request?
A repricing request will not always produce a better rate.
The lender may consider your existing pricing already competitive, offer a smaller reduction than you expected, or simply have no further discount available under its policy.
A “no” is still useful information.
You now know what your lender is prepared to offer and can compare that with suitable alternatives.
This is often more useful than assuming refinancing is necessary without first giving your existing lender an opportunity to review the loan.
If another lender appears more competitive, the next step is to look at whether switching stacks up after considering the rate, fees, features, borrowing requirements and remaining loan term.
What should you check before accepting a repricing offer?
A lower rate is generally positive, but it’s worth confirming exactly what’s changing before you accept.
Check whether the repricing simply changes your interest rate or discount, or whether you’re being switched into a different loan product to access it. If it’s the latter, confirm the new product’s fees and features match what you have now. If you use an offset account, for example, make sure it stays properly linked to your home loan.
This detail matters. ASIC has previously identified cases where switching loan products left offset accounts disconnected, meaning customers missed out on the interest benefit they expected.
It’s also worth checking when the new rate takes effect and what your new minimum repayment will be. If you can comfortably continue paying your previous (higher) amount, doing so can accelerate principal reduction, though whether that suits you depends on your own circumstances and priorities.
Can repricing hurt your credit score?
Homeowners sometimes worry that simply asking their lender for a better rate will have the same effect as submitting multiple home loan applications.
A pricing request and a new credit application are not necessarily the same process.
However, lenders have different systems and a request that involves changing products, borrowing more money or materially altering the loan could require further assessment.
Rather than assuming, ask what the lender needs to do before proceeding.
If you are considering refinancing as well, be deliberate about applications. Comparing possible loans does not mean you need to lodge formal applications with numerous lenders.
A broker can help you understand which options may be relevant before an application is submitted.
Is the lowest interest rate always the better home loan?
No. Interest rate is a major part of the cost of a mortgage, but it is not the only consideration.
A homeowner may value an offset account, the ability to make additional repayments, flexible redraw, split-loan options or other features.
Those features should not be paid for unnecessarily, but they should not be discarded to obtain the lowest advertised rate either.
For example, a borrower who keeps a substantial cash balance in an offset account may get significant value from that feature. Moving to a lower-rate product without an offset could leave them worse off overall.
The right question isn’t, “What is the lowest rate?”
It is, “What does this loan cost me, and does it provide the features I actually need?”
How often should you review your home loan?
There is no single rule.
It is more important to avoid the “set and forget” habit.
Some homeowners choose to review their mortgage annually. Others review when there is a material change, such as the end of a fixed-rate period, a significant shift in their equity position or a noticeable difference between their rate and comparable products. You can also review when your circumstances change.
A review does not mean you need to refinance every year, and continually changing loans can create unnecessary costs.
What if repayments are becoming difficult?
Repricing can potentially reduce interest costs, but it should not be treated as a substitute for seeking help if you are struggling to make mortgage repayments.
If you are experiencing financial difficulty, contact your finance broker or lender as early as possible and ask about the lender’s hardship support.
There may be options available depending on your circumstances. Free financial counselling is also available through services such as the National Debt Helpline.
The priority in that situation is not simply securing a slightly better interest rate. It is making sure the repayment arrangement is manageable and getting appropriate support before the position becomes more difficult.
