Top Strategies to Refinance Before Selling Your Home

Refinancing before you sell only makes sense if the savings or benefits outweigh the costs of setting up a loan you may hold for a short time. For most sellers, the answer is no. For some, it is worth a closer look.

If your sale is a few months away, a new loan will probably cost more than it saves. If the sale is a year or more away, or you plan to keep part of your equity for the next purchase, the numbers can change. This article helps you work out which group you are in.

Should You Refinance Before Selling a Property?

Usually not, because selling means the loan is discharged at settlement, so any new loan has only a short time to repay its own setup costs. Refinance only if the saving over your holding period clearly exceeds the total cost of switching.

The costs can include a discharge fee on the old loan, an application fee on the new one, and a break fee if you are leaving a fixed rate early. Fees vary by lender, so ask for the exact figures before you decide. A refinance can also mean paying lenders mortgage insurance if you have less than 20 per cent equity, which can add to the cost of switching.

As an example, a borrower on a balance of $500,000 at the illustrative rate of 6.75% p.a. pays about $2,813 a month in interest-only terms. If a switch cut the rate by 0.5 percentage points, the interest saving would be roughly $208 a month. Over a 4 month sale timeline that is about $833, which switching fees could wipe out, depending on the lender. Over 18 months it is about $3,750, and the case becomes more realistic. This is an illustration only. Use our mortgage repayment calculator to test your own numbers.

Do You Pay Exit Fees When You Sell or Refinance?

In most cases you cannot be charged a fee just for ending a home loan signed on or after 1 July 2011 and secured by residential property. Break fees on fixed rate loans and discharge fees are different and can still apply.

The rules sit in the National Consumer Credit Protection Regulations. A break fee applies when you end a fixed rate loan before the term finishes, and it does not apply to variable loans. A discharge fee covers things like legal and land registry costs, and it applies whether you refinance or sell. Selling a property also requires a discharge authority form, so the discharge cost is likely regardless of what you do.

If your fixed rate is close to ending, timing matters. Selling or refinancing after the fixed period finishes can avoid a break fee altogether. Check your loan contract or ask your lender for a break cost estimate before you list.

When Does Refinancing Before a Sale Actually Help?

Refinancing before a sale helps when you want to release equity for your next purchase, when you are buying before you sell, or when a long selling timeline means a lower rate adds up. In those cases the new loan does a specific job.

Consider a homeowner who has found their next home but expects to take several months to sell the current one. Their lender will only lend up to a set loan-to-valuation ratio, and their existing loan is tied up in one security. A broker reviews the position and sets up a refinance that releases some equity from the current home as a separate loan split. The homeowner uses that split towards the deposit on the new property. The old property then sells, the sale proceeds clear the original loan and the split, and the borrower is left with only the new loan.

The trade-off is that borrowing more means higher total debt, and the lender will assess your ability to repay both loans. Lenders add a serviceability buffer of 3 percentage points above the loan rate when assessing new borrowers, so borrowing power can be tighter than you expect. Our borrowing capacity tool gives a starting point, and a broker can check it against lender policy.

A property valuation also plays a part. The amount of equity you can access depends on what the lender values your home at, which may differ from your agent's appraisal. You can see how equity is used for another purpose in our guide to equity release.

Can You Refinance if You Are on a Government Scheme Loan?

Only in limited ways. If your loan is under the Australian Government 5% Deposit Scheme, you may be able to refinance to another participating lender and keep the benefit, but you cannot increase the loan or extend the term.

Moving to a lender outside the scheme counts as full repayment of the home loan, so the scheme benefit ends. If your loan-to-valuation ratio is still above 80 per cent, the new lender may charge lenders mortgage insurance or other costs under its policy. Scheme cover also ends if you sell the property, so a pre-sale refinance often adds cost without adding benefit.

Help to Buy loans have their own rules. Refinancing needs approval from your existing participating lender and Housing Australia, and you pay the refinancing costs. Speak with your broker before changing anything.

What If the Property Is an Investment?

If the property is an investment, a refinance can change the interest you can claim, and selling can trigger capital gains tax. Both need advice from your accountant before you act.

The ATO says interest is deductible based on what the borrowed money is used for, not what the property secures. If you add funds to the loan and use them for private purposes, interest on that portion must be apportioned. Borrowing expenses over $100, such as broker fees and loan establishment fees, are generally spread over five years or the loan term, whichever is shorter. If the loan is repaid early, the remaining balance is generally deductible in that year, to the extent the loan was used for rental purposes.

Negative gearing rules now depend on when you acquired the property and whether it is a new build. Properties held at 7:30pm AEST on 12 May 2026 keep the earlier treatment until sold. It is not clear whether a refinance affects this treatment, so confirm the position with your accountant before you restructure. For more on funding from an existing investment, see using investment equity.

How Do You Decide Quickly?

Start with a loan review. A loan health check compares your current rate, fees and features with what is available, so you can see the saving and the cost side by side.

If the saving is small or your sale is close, staying put is often the right call. If you need equity for the next purchase, a refinance may be worth it. Either way, your broker must act in your interests and weigh the costs of switching against the benefits, and sometimes the honest advice is to stay where you are.

Call one of our team or book an appointment at a time that works for you, and we will run the numbers on your situation before you commit to anything.

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