Are You Trapped in an Old Loan? Refinancing Opportunities in Australia Right Now

If you took out a home loan or commercial property loan more than two or three years ago and have not reviewed it since, there is a real chance you are overpaying every single month — and you may not even know it.

The lending market in Australia has shifted significantly. Lenders are competing hard for business. Products have changed. And the gap between what loyal, existing customers pay and what a new borrower can get today is often substantial.

Here is how to spot if you are trapped — and what you can do about it.

The Loyalty Tax Is Real

Lenders rely on borrower inertia. Once you are set up with a loan, the path of least resistance is to stay — even when better deals are available elsewhere.

The difference between what existing customers pay and what new customers are offered is sometimes called the loyalty tax. It is not a fee. It is simply the extra interest you pay because you have not asked questions or moved.

On a $600,000 home loan, a 0.5% rate difference costs you $3,000 per year. On a $1.5 million commercial loan, that same gap costs $7,500 per year. Over five years, the numbers are significant.

Who Is Most Likely Trapped

Borrowers who fixed their rate in 2022 or 2023. Fixed rates from that period — many in the 4.5% to 6% range — are now expiring and rolling onto standard variable rates that may be well above what a new borrower would pay today. If your fixed term ended and you did nothing, you are almost certainly on a rate that is not competitive.

Business owners with loans set up three or more years ago. Commercial loan margins have compressed in some sectors as lenders compete for quality deals. A commercial loan arranged in 2022 or 2023 may carry a margin that is 0.25% to 0.75% higher than what the same borrower could get today.

Anyone who has not had a formal loan review. If your broker or lender has not proactively reviewed your rate in the last 12 months, no one is watching out for your interest. You need to prompt that conversation yourself — or find someone who will do it for you.

Borrowers whose property has increased in value. If your property is worth more than when you took the loan, your loan-to-value ratio (LVR) has improved. Lenders price better at lower LVRs — and you may now qualify for a rate tier that was not available to you when you first borrowed.

Real Numbers: What the Saving Looks Like

These are illustrative examples based on a 0.50% rate reduction, which is well within the range of what borrowers regularly achieve through refinancing or negotiation.

Loan Amount	Annual Saving	5-Year Saving
$500,000 home loan	$2,500	$12,500
$750,000 home loan	$3,750	$18,750
$1,000,000 commercial loan	$5,000	$25,000
$2,000,000 commercial loan	$10,000	$50,000
$3,000,000 commercial loan	$15,000	$75,000

These figures do not account for compounding. They also do not account for the possibility of securing a rate reduction larger than 0.50% — which some borrowers achieve.

What Refinancing Actually Involves

Refinancing sounds complicated. It is not. The basic process is:

Step 1 — Review. A broker compares your current rate and structure against what is available in the market today. This costs nothing and takes one conversation.

Step 2 — Application. If a better deal exists and the numbers stack up after accounting for switching costs, you apply with the new lender.

Step 3 — Discharge and settlement. Your existing loan is paid out and the new loan settles. For residential loans this typically takes two to four weeks. For commercial loans, four to eight weeks depending on complexity.

The costs to watch: Discharge fees from your existing lender (typically $150–$400 for residential, higher for commercial), a new valuation ($300–$600 for residential, $1,500–$3,000 for commercial), and legal fees for commercial loans. In most cases these costs are recovered within 12 to 18 months of the saving at the new rate.

Should You Fix or Stay Variable?

With the RBA holding at 4.35% and the August 2026 meeting live, the fix vs variable question is front of mind for many borrowers right now.

Fixing provides certainty. If rates rise in August or September, your repayment does not change. The risk is that if rates fall in 2027 — which CBA, NAB and ANZ are all forecasting — you may be locked into a rate above market.

A split loan — part fixed, part variable — can give you the best of both. You get certainty on a portion of your debt while retaining flexibility on the rest.

The right answer depends on your cash flow, your loan size, and how much rate risk you can absorb. Your broker can model both options with your actual numbers.

Do Not Wait for Rates to Drop

A common mistake is waiting for the RBA to cut rates before reviewing a loan. The logic is understandable — rates will be lower, so refinancing later makes more sense. The problem is that cuts are not expected until 2027 at the earliest, and waiting costs you every month in the meantime.

The best time to review your loan is now — not when rates move. A 0.50% saving secured today is worth more than a 0.25% RBA cut you might receive in 12 to 18 months.

Speak to a Finance Specialist

If you have not reviewed your home loan or commercial loan in the past 12 months, you owe it to yourself to find out whether you are paying more than you need to. The conversation is free. The saving could be thousands of dollars a year.

Our team works with both residential and commercial borrowers across Australia. We compare rates across a wide panel of lenders and handle the process from review to settlement.

Get a free loan review today — it takes one phone call.

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This article is general information only and does not constitute financial advice. Savings figures are illustrative only based on a 0.50% rate reduction and do not account for fees, charges, or individual circumstances. Please speak with a licensed mortgage or finance broker for advice specific to your situation.