Cash out refinance Australia: how it works and what to consider
Learn how cash out refinancing works, when it makes sense to use it, and how it can help you access equity to fund renovations, investments or big expenses.
Cash-out refinancing is the process of replacing your existing home loan with a larger one. It allows you to access some of the equity built up in your property as cash. The difference between the new loan amount and the existing loan balance is released to the borrower at settlement.
A cash-out refinance is one reason borrowers review their existing loan arrangement.
What is cash-out refinancing?
Cash-out refinancing is a type of home loan refinancing where the borrower takes out a new loan larger than the existing balance. The borrower then receives the difference between the two loan amounts as cash. The original loan is closed and replaced with a new, larger loan.
This differs from a standard refinance, which replaces a loan to change the rate or terms without increasing the balance. It also differs from a home equity loan. A home equity loan sits on top of an existing mortgage as a separate debt.
A cash-out refinance consolidates both into one new loan.
The released funds can be deposited into a bank account, an offset account, or a line of credit.
How does equity work in a cash-out refinance?
Equity is the difference between a property’s current market value and the amount still owed on the home loan. The more equity, the more may be available to access through a cash-out refinance.
Most Australian lenders require borrowers to keep at least 20% equity in the property after refinancing. This means the maximum loan-to-value ratio (LVR) is typically 80%.
Worked example: how much equity can you access?
A property is valued at $800,000. The owner still owes $400,000 on their home loan.
- Maximum loan at 80% LVR: $800,000 × 0.80 = $640,000
- Current balance: $400,000
- Available cash-out: $640,000 − $400,000 = $240,000
The owner could refinance up to $640,000, releasing up to $240,000 in cash. Any amount above the 80% LVR threshold is generally not available through a standard cash-out refinance.
If a property has grown in value since purchase, equity may have increased even when the loan balance has not changed much. The lender will arrange a valuation as part of the application, and the outcome will determine how much equity can be accessed.
What are the costs of a cash-out refinance in Australia?
Refinancing a home loan in Australia typically costs between $500 and $2,000 in total fees. The exact amount depends on the lender, the state, and whether the borrower is switching to a new lender or staying with their existing one.
The table below shows the main fee types and their typical ranges.
Not all lenders charge every fee. Compare the total cost of refinancing, fees and rate together across lenders rather than the rate alone. With Unloan, there are no application fees and no ongoing fees.
What do lenders assess in a cash-out refinance application?
Lenders look more closely at a cash-out refinance application than a standard refinance because the new loan amount is larger. Common assessment areas include property valuation, income and serviceability, credit history, and the intended use of funds.
Property valuation
The lender will value the property and may arrange a formal property valuation. This figure determines the LVR and, in turn, how much equity can be accessed. The valuation result may differ from a borrower’s own estimate or a real estate agent’s appraisal.
Income and serviceability
Lenders assess whether the borrower can service the higher loan amount. This includes reviewing income, employment stability, living expenses, and existing debts. Serviceability is calculated using a buffer rate above the actual loan rate.
Credit history
Lenders review the credit file as part of the application. A cash-out refinance application involves a credit enquiry, which is recorded on the credit file.
Intended use of funds
Many lenders ask how the released funds will be used. Common purposes include home renovations, debt consolidation, investment deposits, and large expenses. Some lenders require supporting documents, such as quotes or evidence of existing debt.
How does debt consolidation work with a cash-out refinance?
Debt consolidation through refinancing means rolling higher-interest debts, such as personal loans or credit cards into the home loan. Debt consolidation can make repayments easier to manage. However, it may cost more overall if the fees are higher or the loan term is longer than the existing arrangements.
Home loans typically carry lower interest rates than unsecured personal debt. Consolidating short-term unsecured debt into a long-term home loan can increase the total interest paid over the life of the loan. This depends on how the repayments are structured.
Depending on your circumstances, consolidating debts into your home loan may have tax or financial implications. You should make sure you understand the implications or seek professional tax advice before making any decisions.
Tax considerations for cash-out refinancing
The tax treatment of interest on a refinanced loan depends on how the funds are used. The Australian Taxation Office (ATO) has specific rules about when interest stays deductible after refinancing. For instance, funds used for personal purposes do not attract the same treatment as funds used for income-producing purposes.
To work out the deductible portion, a borrower must determine how much of the original loan remains tied to a rental or investment property. This calculation is needed to establish the correct deductible amount.
Tax treatment can depend on individual circumstances and may change over time. Consider getting independent financial or tax advice before proceeding with a cash-out refinance for investment purposes.
Common questions about cash-out refinancing in Australia
Can I refinance my house to get cash?
A cash-out refinance can give access to equity when the LVR is at or below 80% after the new loan is drawn. The property’s current value, the existing loan balance, and the ability to service the new loan all affect eligibility.
How much can you refinance with cash out?
The amount depends on the property value, existing loan balance, and the lender’s maximum LVR. At an 80% LVR limit, a $1,000,000 property with $500,000 owing would allow a maximum refinanced loan of $800,000, releasing up to $300,000 in cash. Use Unloan’s borrowing power calculator for an estimate based on your own figures.
Is a cash-out refinance the same as a home equity loan?
They are different products. A home equity loan adds a separate loan on top of the existing mortgage. A cash-out refinance replaces the existing mortgage with a new, larger loan.
The two products have different structures, rates, and repayment implications.
What LVR do I need for a cash-out refinance?
Most lenders require an LVR of 80% or below after the cash-out amount is included. Borrowing above 80% LVR may incur additional costs. Saving 20% typically means you won’t need to pay Lenders Mortgage Insurance (LMI).
Will a cash-out refinance affect my credit file?
Refinancing involves closing an existing loan and opening a new one. This creates a credit enquiry, which stays on the credit file. Shopping for rates through multiple lenders in a short period creates multiple enquiries, which can affect a credit profile.
How long does the refinancing process take?
The timeline depends on the borrower’s circumstances, the lender, and the complexity of the application. Unloan’s home loan application process is designed to be easy and fast, so you can apply online in minutes.
About Unloan
Unloan is a low-rate variable home loan built by CommBank — Australia’s largest lender. Unloan has won the Canstar Outstanding Value Award for Variable Home Loan Lender in 2023, 2024, 2025, and 2026. The variable rate includes a loyalty discount that grows by 0.01% p.a. every year you stay (up to 30 years).
Unloan charges no application, ongoing, banking, account change, or exit fees*. Apply online in minutes, manage your loan through the app, and access unlimited free redraw. Live Australian support from home loan specialists is available when you need it.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. If you currently have an Unloan home loan with an active Lender’s Mortgage Insurance (LMI) policy the maximum amount you can borrow across all Unloan loans is $3,000,000. Please note Unloan currently doesn’t offer loans with an LMI premium. In some cases, depending on the property’s location or type, we may only be able to lend you up to 70% of the property’s value.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. If you currently have an Unloan home loan with an active Lender’s Mortgage Insurance (LMI) policy the maximum amount you can borrow across all Unloan loans is $3,000,000. Please note Unloan currently doesn’t offer loans with an LMI premium. In some cases, depending on the property’s location or type, we may only be able to lend you up to 70% of the property’s value.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The loyalty discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
