How refinancing works in Australia: steps, timeline, discharge and settlement

Refinancing in Australia follows a predictable sequence: compare and apply, the new lender values the property and approves the loan, you sign the new loan documents and a discharge authority for your old lender, and at settlement the new lender pays out the old loan electronically while the old mortgage is discharged and the new one registered on your title. It commonly takes a few weeks from application to settlement, but delays at either lender are frequent, so start well before any fixed rate expiry or cashback deadline and keep paying the old loan until it is closed.

This guide is part of home loan refinancing mistakes. Timings and fees below are illustrative.

The steps in order

Step	What happens	Who acts	Typical timing
1. Review	Gather balance, rate, term and fixed expiry; ask current lender to reprice	You	Week 0
2. Compare and apply	Choose a lender, submit the application and documents	You or your broker	Week 1
3. Valuation	The new lender orders a valuation	New lender	Days to a week or so
4. Approval	Conditional, then unconditional (formal) approval	New lender	Varies, often 1 to 2 weeks
5. Discharge authority	You sign and submit the old lender's discharge form	You	As soon as approval is near
6. Loan documents	The new lender sends documents to sign, often electronically	You	After formal approval
7. Settlement booking	Lenders agree a date on an electronic settlement platform	Both lenders	Once both are ready
8. Settlement	New lender pays the payout figure; mortgages discharged and registered	Lenders, land titles office	Settlement day
9. Tidy up	Move direct debits, close old accounts, check first statements	You	First month

Whole process: commonly two to six weeks. Discharge processing at the old lender is a common bottleneck. Ask both lenders for their current timeframes.

The discharge authority

Your current lender needs your written authority to close the loan and release the mortgage. Points to know:

All borrowers must sign, including a former partner if they are still on the loan.
The form asks which accounts to close, including any offset, and whether you are refinancing or selling.
Some lenders call you to try to retain you. You can still ask for a better rate at this point; see asking your lender for a lower rate.
Submit it early. Late submission is a common cause of missed settlement dates.

Understanding the payout figure

The amount the new lender pays at settlement is your balance plus interest accrued since your last repayment, plus the discharge fee and any break cost.

Illustrative example:

Balance: $520,000
Rate: 6.49%, interest calculated daily
Days since last interest charge: 12
Accrued interest: $520,000 x 6.49% / 365 x 12 = about $1,109.52
Discharge fee: $395
Payout figure: about $521,504.52

Government registration and discharge fees are usually paid at settlement too, often added to the new loan or paid from your account. If your new loan is set at exactly your old balance, there may be a small shortfall to cover from savings.

Electronic settlement and the title

In most states and territories, refinances settle electronically through an electronic lodgment network, such as PEXA. At settlement, funds move between the lenders, the discharge of the old mortgage and the registration of the new one are lodged with the land titles office, and the government fees are paid. You do not usually need to attend.

Money in offset and redraw

Offset balance: decide whether to move it before settlement or let the old lender apply it to the payout. If it reduces the payout, your new loan can be smaller.
Redraw: available redraw is part of the loan balance. If you want to keep that cash, draw it down before refinancing and hold it in the new offset, then check the new lender knows the higher loan amount.
Investment loans: keep records of where every dollar goes, because mixing purposes can affect interest deductions. Ask a registered tax agent before restructuring.

After settlement checklist

Old lender confirms the loan is closed and the mortgage discharged
Any surplus funds from the old account are returned to you
New loan repayment set up from the right account and date
Salary redirected to the new offset, if you have one
Direct debits and BPAY billers moved
New loan term and rate checked against the approval
Cashback received by the promised date
Credit report checked after a month or two to see the old loan shown as closed

Common delays and how to prevent them

Delay	Prevention
Missing documents	Use the home loan checklist before applying
Low valuation	Ask for the valuation early; have recent comparable sales ready
Discharge form late or incomplete	Submit as soon as approval looks likely, signed by all borrowers
Fixed rate break cost surprise	Get a written break cost quote first; see fixed rate break costs
Name mismatch on title	Check that names on the loan, ID and title match

Frequently asked questions

Do I need a conveyancer to refinance?

Usually not. The lenders handle discharge and registration through their settlement agents. If ownership is changing, for example adding or removing a person from the title, you may need a conveyancer or solicitor, and duty may apply.

Will my repayments overlap?

Possibly for one cycle. Keep paying the old loan until settlement; any overpayment is included in the payout calculation or refunded.

Can I refinance while my property is being renovated?

It can be harder, because the valuation may be lower or the lender may treat it as a construction loan. Talk to the lender before applying.

What if settlement fails on the day?

It is rebooked. Interest keeps accruing on the old loan, and a cashback deadline could be missed, so ask the new lender how it handles delays.

Sources

ASIC Moneysmart — switching home loans
Australian Financial Complaints Authority — complaints about delayed discharges
NSW Land Registry Services — example of land title registration in one state