Switching a home loan is not one transaction. It is two processes running at the same time: a brand-new loan application you have to be assessed for, and the discharge of the loan you already have. They meet at settlement, when the new lender pays out the old loan and registers its own mortgage over the property. Until that happens, you still owe the old lender and still have to keep paying it.
The government's Moneysmart site frames switching as a comparison job before it is a paperwork job: build a shortlist of potential loans and the fees involved, then use the mortgage switching calculator to work out whether you will actually save money by changing. This guide turns that into an order of operations, and lists the documents you can expect to gather along the way.
What switching actually involves
Two tracks, one finish line.
The new application. You apply to a new lender, they assess your income, expenses, debts and the property, and decide whether to lend and on what terms. Nothing here is guaranteed — a new loan is a fresh credit decision, not a transfer of your existing one.
The discharge. Your current loan has to be paid out and the old lender's mortgage removed from the property title. In practice your new lender usually coordinates this through settlement, but the paperwork that authorises it is yours to sign.
Settlement. The new lender's funds pay the old lender's payout figure, and the change is registered. After that date your repayments go to the new loan.
Before you apply: what to check
Read your current loan contract first, before you look at anything else. You are looking for three things:
- What it costs you to leave. Your contract and fee schedule set out any exit or discharge charges, and what you owe if you leave a fixed-rate loan before the fixed period ends. Ask your current lender for the exact figures in writing — do not estimate them.
- What your rate does next. If you are on a fixed rate that is about to end, your rate does not stay fixed. Moneysmart uses the example of a couple whose fixed-rate period ends in a few months and whose interest rate will then increase. Check what your contract says your rate reverts to, and when.
- What features you would give up. Offset accounts, redraw, split loans, repayment holidays and fee waivers do not automatically follow you to a new lender.
Moneysmart also points to timing context: the Reserve Bank of Australia's Monetary Policy Board meets eight times a year to decide whether to increase, decrease or maintain the cash rate. That is useful background for anyone on a variable rate, but it is not something you can schedule a switch around. Decide on the numbers in front of you, not on a predicted rate move.
Two practical cautions that are not in the calculator:
- Resetting the loan term. If your new loan restarts a 30-year term, repayments can fall while total interest rises. Compare like with like — same remaining term, same repayment frequency.
- Borrowing more at the same time. Mixing a switch with extra borrowing changes the assessment and the paperwork. Keep the two decisions separate so you can see what each one costs.
Documents lenders typically ask for
Exact requirements differ between lenders, so treat the following as the set to have ready, and confirm the details with the lender you apply to.
| Category | What to expect | What to verify |
|---|---|---|
| Identity | Photo ID such as a passport or driver licence, sometimes a second document | Which documents that lender accepts, and whether certified copies are needed |
| Income — employed | Recent payslips and sometimes a letter from your employer | How many payslips, and whether any casual, overtime or bonus income is counted |
| Income — self-employed | Tax returns and assessments, and business financials | How many years of records they want |
| Existing home loan | Recent statements and the payout details for the loan being discharged | Whether they need a formal payout figure or a statement is enough |
| Property | Details of the property being used as security, and any rates or council notices requested | Whether they will organise their own valuation, and who pays for it |
| Other debts | Statements for credit cards, personal loans, car loans and any other commitments | Whether limits or balances are used in the assessment |
| Living expenses | A breakdown of regular spending, sometimes from bank statements | The period they want you to cover |
| Savings or deposit | Evidence of funds if you are borrowing more or covering costs | Which accounts count |
Having this ready at application time is the single biggest thing you control. Most delays in switching are document delays, not assessment delays.
The steps, in order
- Read your current contract and get the figures for exiting it: discharge fee, any break cost, and the payout amount as at a date you choose.
- Shortlist two or three loans and write down every fee attached to each — upfront, ongoing and exit. Moneysmart's switching guidance is built around this step.
- Run the mortgage switching calculator with those fees included, using your actual balance and remaining term. If the numbers do not clearly favour switching, say so and stop.
- Apply to one lender and supply the documents above. Multiple applications at once can affect your credit file — ask before you lodge a second one.
- Valuation and assessment. The lender values the property and assesses your income, expenses and debts.
- Formal approval and loan documents. Read the contract, the rate, the term, the fees and the repayment amount before signing. Check them against what you were quoted.
- Sign and return the documents, and complete the discharge authority for your existing loan. This is the document that lets the old loan be closed at settlement.
- Settlement. The new lender pays out the old one and the new mortgage is registered. Confirm the date and keep paying the old loan until it happens.
- After settlement. Check the old loan is closed and any linked accounts or direct debits are cancelled, then move your repayments, insurance and any offset arrangements across.
Timing, and fixed-rate expiry
If your fixed period is ending, start earlier than feels necessary. You want the new loan ready before the old rate changes, not after — and you want to know the reversion rate in your current contract so you can compare properly if the switch falls through.
Moneysmart's switching page sits alongside its fixed-versus-variable explainer for a reason: the rate type you are leaving and the rate type you are moving to change the risks you carry. A variable rate moves with the lender, which is why the eight RBA Monetary Policy Board meetings a year matter to you. A fixed rate gives certainty for a set period, which is why leaving one early can carry a cost.
Questions to ask before you commit
- What is the exact payout figure, and what date is it valid to?
- Which fees do I pay to leave, and which do I pay to join?
- Does the new loan keep my remaining term, or restart it?
- Will my offset, redraw or split structure carry across?
- Who arranges and pays for the valuation?
- Who lodges the discharge, and what do I have to sign?
- What is the settlement date, and what happens to my repayments in between?
Next steps
Pull your current loan contract and your last few statements today, and get the exit figures from your lender in writing. That single step tells you whether switching is worth pursuing, and it is the same information you will need anyway.
If you want to see the loan types and features side by side before you shortlist, browse home loans. If you would rather be matched to options based on your own situation, start with match. Neither is a substitute for reading the contract you are offered.
General information only
This article is general information about how switching a home loan works in Australia. It is not legal, tax, credit or financial advice, and it does not account for your personal circumstances. It cannot predict whether a lender will approve you, or whether switching will save you money. Fees, rates, contract terms and lender requirements change and differ between lenders — confirm every figure and requirement directly with your current and prospective lenders, and consider speaking to a licensed broker, accountant or legal adviser before you sign. Australian Cash is an independent information publisher, not a lender, broker, government body or regulator, and does not lend money or arrange loans.