It is official, not only did the RBA reduce the cash rate by 25 basis points again in December, after doing so also in November, but also majority of lenders including the big four banks have decided to pass on the cash rate reduction to holders of home loans, car loans, personal loans etc – ie. Aussie families. The cash rate is now at 4.25% and if you look hard enough you will find lenders offering home loans for sub 6.00% interest rates.

Treasurer Swan has suggested to borrowers that if your lender has not passed on the rate cut in full or if you have simply seen a cheaper home loan deal elsewhere – just switch. However those who have tried to refinance will confirm that home loan refinance is not as simple as the treasurer would like to make us believe.

Firstly you must put together a vast number of documents to see if you will qualify for a loan with a different lender. It may be that in the time that you have been in your current home loan, your income situation has changed – perhaps you are on maternity leave or your partner has lost their job – this will affect your ability to refinance.

Then there is the property valuation, just because your house valued for $450,000 last year and you could borrow $400,000 to buy it – today things may have changed and perhaps your property simply does not have the value in the current market to qualify for the same size loan.

Additionally many people researching new home loans will confirm that most lenders charge application fees to the tune of several hundred dollars and these need to be paid if you wish to leave your current lender and take out a new home loan.