The three steps to successfully refinance (and save $428 a month)
Sydney Morning Herald
by Nicole Pedersen-McKinnonFebruary 20, 2026
AI-Generated Deep Dive Summary
Refinancing your mortgage can save you up to $428 a month, especially with rising interest rates. Many Australians are rushing to refinance their mortgages to secure better loan terms, driven by the need to adapt to higher borrowing costs. With an average variable rate now at 6.5%, borrowers are seeking out competitive loans, often at lower rates like 5.5%. However, successful refinancing requires careful preparation and strategic financial planning.
The first step is managing your expenses through what’s known as the "Netflix test." Lenders scrutinize your spending habits over three months to assess your financial stability. Reducing unnecessary expenses—like streaming services, food deliveries, and dining out—can boost your disposable income and help you pass this critical evaluation. Additionally, lenders require borrowers to meet a 3% repayment stress test, meaning you must be prepared for an additional 300 basis points increase in rates.
Improving your credit score is another crucial step. Lenders review your credit history and score as part of their decision-making process. Errors on your credit report can lower your score, so it’s essential to check for inaccuracies and correct them. A higher credit score increases your chances of approval and better loan terms. With four free credit reports available annually in Australia, there’s no excuse not to monitor and improve your financial standing.
Finally, managing your credit card limits is vital. Even unused credit limits can impact your borrowing capacity. Lenders typically reduce your available funds by seven times your total credit limit when assessing a mortgage application. By keeping your credit utilization low and avoiding unnecessary debt
Verticals
worldaustralia
Originally published on Sydney Morning Herald on 2/20/2026