Is it easier to refinance than get a mortgage in Sydney?

Today, we’re going to delve deep into the world of mortgages and refinancing in our lovely city, Sydney. More specifically, we’re going to answer a question that’s on the minds of many homeowners and prospective buyers: “Is refinancing easier than getting a mortgage?”

Understanding Refinancing and New Mortgages in Sydney

Let’s get to grips with the basics first. Refinancing is the process of replacing your existing mortgage with a new one, usually with a different lender and often with better terms. Getting a new mortgage, on the other hand, is the process of taking out a loan to buy a property for the first time or to replace an existing home loan.

The key difference between the two is that refinancing involves changing the terms of an existing mortgage, while getting a new mortgage involves setting up a home loan from scratch.

Comparing the Ease and Complexity of Refinancing and Getting a New Mortgage

So, what’s involved in each process? Refinancing typically involves assessing your current financial situation, researching potential lenders, applying for a new loan, and then using that loan to pay off your existing mortgage.

In contrast, getting a new mortgage involves saving for a deposit, researching potential lenders, applying for a loan, waiting for approval, and then using the loan to purchase a property.

Comparatively speaking, refinancing can often be a quicker process as you’re not dependent on a property sale to proceed. However, this isn’t always the case, and the complexity and time required for both processes can vary widely depending on individual circumstances.

Costs Involved in Refinancing and Getting a New Mortgage

When it comes to costs, both refinancing and getting a new mortgage have their fair share. With refinancing, you might face costs such as a discharge fee from your old lender, application fees for the new loan, and possibly break costs if you’re exiting a fixed-rate loan early.

Getting a new mortgage, on the other hand, can involve costs such as application fees, stamp duty, legal fees, and lender’s mortgage insurance if your deposit is less than 20% of the property’s value.

Both processes can also involve hidden charges, such as valuation fees or ongoing account keeping fees, so it’s always worth reading the fine print and asking your lender about any potential extra costs.

Eligibility Criteria for Refinancing and Getting a New Mortgage

Eligibility criteria for refinancing typically include having a good credit score, being up-to-date with your current mortgage payments, and having a certain amount of equity in your home. For a new mortgage, criteria can include having a good credit score, a stable income, and a sufficient deposit.

In general, the criteria for refinancing can be less stringent as you’ve already proven your ability to manage a home loan. However, this can vary depending on the lender and your individual circumstances.

Choosing Between Refinancing and Getting a New Mortgage: Advice and Recommendations

When deciding between refinancing and getting a new mortgage, it’s important to consider your financial situation and goals. Refinancing can be a good option if you’re unhappy with your current loan or if you can get a better deal elsewhere. However, it’s not without its costs, and it’s not always the best option if you’re planning to sell your property soon.

Getting a new mortgage can be a good choice if you’re looking to buy a property for the first time or if you’re planning to move. However, it can be a longer and more complex process, and it often involves higher upfront costs.

Benefits of Refinancing

Now, let's talk about the benefits of refinancing. One of the main advantages is that it can ease your monthly cash flows. By securing a lower interest rate or extending your loan term, you can reduce your monthly payments, freeing up some extra cash for other expenses. This can be particularly helpful in financial emergencies when you need access to funds quickly.

Refinancing can also facilitate a faster home loan payoff. If you're able to secure a lower interest rate, you might be able to keep your monthly payments the same but pay off your loan faster. This can save you a significant amount of money in the long run.

Another potential benefit of refinancing is the opportunity to use your home equity to invest, renovate your house, or build an emergency fund. If you've built up a significant amount of equity in your home, you can tap into it through a cash-out refinance. This involves taking out a new loan for more than you owe on your current mortgage, then using the difference for other financial goals. However, this strategy requires discipline to ensure the funds are used wisely.

Lastly, refinancing can lower your interest rate, reducing your monthly payments. This can make your mortgage more affordable and free up cash for other financial goals. However, it's important to consider the costs associated with refinancing, such as closing costs and fees. These costs can add up, and it's crucial to ensure that the savings from a lower interest rate outweigh these costs.

Drawbacks of Refinancing

Refinancing a mortgage is not a walk in the park. It's a time-consuming process that requires a lot of paperwork and patience. You'll need to gather all your financial documents, fill out numerous forms, and wait for the lender's approval. This can take weeks or even months, depending on the complexity of your financial situation and the lender's workload. To make things easier, you should enlist the help of a mortgage broker. See my list of the top mortgage brokers in Sydney, and see how they can help you through the process. Usually mortgage brokers don't charge you anything for their services, as they receive payment from the lenders.

Moreover, refinancing isn't free. There are potential expenses associated with it, such as application fees, origination fees, and appraisal fees. These costs can add up quickly and may offset the potential savings from a lower interest rate. It's crucial to factor in these costs when calculating the potential savings from refinancing.

Another potential drawback is the credit score check. Lenders will look at your credit history and score to determine your creditworthiness. If you have a high debt or a low credit score, you may be disqualified from refinancing. This can be a significant setback, especially if you were counting on the lower interest rate to ease your financial burden.

Refinancing also involves the risk of transferring unsecured debt into debt backed by your home as collateral. If you're unable to make the payments, you could potentially lose your home. This is a serious risk that should not be taken lightly.

Lastly, refinancing can result in homeowners paying more over time due to fees, closing costs, a longer loan term, or a higher interest rate tied to a "no-cost" mortgage. While the lower monthly payments may seem attractive, it's important to consider the overall cost of the loan.

Comparing Refinancing to Getting a New Mortgage

Refinancing and getting a new mortgage are two different strategies with their own pros and cons. The key difference is that refinancing involves replacing your current loan with a new one, while getting a new mortgage involves taking out a new loan to purchase a new property.

When deciding between the two, you should consider several factors. These include your current financial situation, your long-term financial goals, the current interest rates, and the costs associated with each option.

The decision to refinance or get a new mortgage is a significant one that should not be taken lightly. It's crucial to calculate the cost and savings of refinancing. If the cost isn't recouped within the planned stay in the home, it may not be worth it.

Homeowners with a variable-rate mortgage should carefully consider their terms before deciding to refinance. If the interest rate is likely to increase in the future, refinancing to a fixed-rate mortgage may be a good option.

Personal financial discipline also plays a crucial role in this decision. Using home equity to invest or build an emergency fund can be beneficial for disciplined individuals. However, if you're prone to overspending or have a history of poor financial decisions, this may not be the best option for you.


In conclusion, whether refinancing is easier than getting a new mortgage in Sydney can depend on a variety of factors, including your financial situation, your goals, and the current property market. It’s always worth seeking professional advice before making a decision. And remember, the most important thing is to choose the option that’s right for you.

About the author 

Harold Simmons

Harold is the founder and creator of the Asset Owners Discussion Project. He creates quality resources so investors can get access to information they wouldn't normally be able to access. He has been investing in real estate for almost three decades and is particularly experienced with mortgages and refinancing.

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