How to Switch Home Loan Lenders in Australia: A Simple Guide

This article first appeared on awesomelendingsolutions.com.au.

Switching your home loan to a new lender sounds like a lot of work. In reality, most of the heavy lifting is done for you, especially if you use a mortgage broker. Here's how switching works and what to expect.

Why switch lenders?

People switch lenders to:

• Get a lower interest rate
• Reduce fees
• Get better features, like an offset account
• Access equity
• Get better service

With rates rising four times in 2026, many borrowers are finding their existing lender's rate is no longer competitive.

Before you switch: ask your current lender

Call your current lender and ask them to match the best rate you can find. Sometimes this solves the problem in one phone call. If they don't offer a competitive rate, it may be time to move.

Step-by-step: how to switch lenders

Step 1: Review your current loan

Check your:

• Balance and rate
• Remaining term
• Fixed or variable status
• Any fees for leaving (discharge fees and break costs)

Step 2: Compare new loans

Compare comparison rates, fees and features. Make sure the new loan suits how you use your money.

Step 3: Gather your documents

You'll usually need:

• Photo ID
• Recent payslips or tax returns
• Recent home loan statements (usually six months)
• Statements for other debts
• Council rates notice

Step 4: Apply

You or your broker submits the application. The new lender checks your income, expenses, credit and the property value.

Step 5: Valuation

The lender values your property, often from a desktop report, sometimes with a visit. The valuation affects your Loan to Value Ratio and your rate.

Step 6: Approval and documents

Once approved, you'll receive loan documents to sign. You'll also sign a discharge authority, which tells your old lender you're leaving.

Step 7: Settlement

Your new lender pays out your old loan. Your old mortgage is discharged and the new one is registered. Your repayments start with the new lender.

How long does it take?

Usually two to six weeks. Delays can happen if documents are missing, the valuation is lower than expected or the old lender is slow to process the discharge.

What it costs

Typical costs include:

• Discharge fee: often $150 to $400
• Government registration fees: a few hundred dollars
• Application or settlement fees: often $0 to $600
• Break costs: if fixed
• LMI: if your new loan is above 80% of the property value

Some lenders offer cashback that can offset these costs.

Tips for a smooth switch

• Don't cancel direct debits early. Keep paying your old loan until settlement.
• Update your direct debits after settlement. Make sure repayments go to the new loan.
• Move your offset or savings carefully. Wait until the new account is set up.
• Keep your repayment amount. Paying the same as before helps you pay off the loan faster.

When switching may not be right

• Your fixed rate has high break costs. Wait until it expires.
• Your property value has dropped. If your LVR goes over 80%, LMI may wipe out savings.
• Your income has fallen. You might not pass the new lender's test.
• You plan to sell soon. You may not recover the switching costs.

An example

Nina's loan of $430,000 is at 6.94%. She switches to a new lender at 6.24%. Her monthly repayment falls by about $190. She keeps paying her old amount and puts the difference towards her loan, cutting years off her term.

Frequently asked questions

Will I have to pay LMI again?

Only if your new loan is over 80% of the property value. LMI doesn't transfer between lenders.

Can I switch lenders if I'm on a fixed rate?

Yes, but you may pay break costs. Get a quote first.

Will my old lender try to keep me?

Often. When you request a discharge, your lender may offer a better rate. It's worth hearing them out.

Do I need to tell my old lender why I'm leaving?

No. But giving a reason can prompt a retention offer, which could save you the effort of switching.

Can I switch if I'm behind on repayments?

It's harder, because lenders check your repayment history. Talk to your current lender about hardship options first, and get advice before applying elsewhere.

Switching with a broker

When you switch through a broker, they compare lenders, prepare the application, follow up the valuation and keep in touch with both lenders until settlement. You still make every decision, but you spend far less time on hold and filling in forms. For busy families and business owners, that time saving alone can make the switch worth it.

Talk to Awesome Lending Solutions

Every situation is different, and the right loan depends on your goals, income and timing. At Awesome Lending Solutions, we compare a wide panel of lenders and explain your options in plain English, with no pressure. Call us on 02 7904 9560 or visit awesomelendingsolutions.com.au to book a chat.

This article is general information only. It does not consider your objectives, financial situation or needs, and it is not financial, tax or legal advice. Scheme rules, interest rates and laws were current as at October 2026 and can change. Speak with a licensed professional before making any decision. Albert Waldron is a Credit Representative (CR 407514) of AFG's Australian Credit Licence 389087.