Find out whether refinancing your home loan makes financial sense. Enter your current and new loan details to see monthly savings, total interest savings, and how long it takes to recoup refinancing costs.
Refinancing Savings Calculator
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Is Refinancing Worth It?
Refinancing your home loan can save tens of thousands of dollars over a loan’s life — but it’s not free. The key question is whether the interest saving outweighs the upfront costs and whether you plan to stay in the loan long enough to break even.
Common Refinancing Costs in Australia
| Cost | Typical amount |
|---|---|
| Discharge fee (current lender) | $150–$400 |
| Break cost (fixed rate only) | $0 to tens of thousands |
| Application / establishment fee (new lender) | $0–$700 |
| Legal / settlement fee | $200–$400 |
| Property valuation | $0–$600 |
| LMI (if LVR > 80%) | Significant — see LMI calculator |
| Total (variable loan, no LMI) | ~$1,000–$2,000 |
If you are refinancing a fixed rate loan before the fixed period ends, break costs can be very large — sometimes $20,000–$50,000+. Always get your break cost in writing from your lender before proceeding. See our break costs guide.
The Break-Even Rule
The break-even period tells you how long it takes for monthly savings to exceed the upfront costs. If:
- Break-even is under 12 months — refinancing is generally worth doing
- Break-even is 12–36 months — worth doing if you plan to stay in the loan
- Break-even is over 36 months — consider carefully whether the savings justify the disruption
When Should You Refinance?
Refinancing is typically worth considering when:
Your rate is uncompetitive — if your variable rate is significantly higher than the lowest available market rate (more than 0.5% difference is usually worth investigating), refinancing may save thousands.
Your fixed period is ending — when your fixed term expires, you typically revert to a standard variable rate (SVR) which is often higher than new customer rates. This is an ideal time to shop around.
Your LVR has improved — if your property has risen in value or you’ve paid down significant principal, you may now qualify for better rate tiers or avoid LMI on a refinance.
You want different features — you may want to add an offset account, increase or decrease your loan term, or access equity for renovation or investment.
You want to consolidate debt — rolling personal loans or credit cards into a lower-rate mortgage can reduce total monthly payments, though this should be approached carefully as it extends short-term debt over a long period.
What Rate Difference Is Worth Refinancing For?
As a rule of thumb, a 0.5% rate reduction on a $500,000 loan saves approximately $2,500/year in interest. Over a remaining 20-year term, that’s $50,000 in gross interest saving — well in excess of typical refinancing costs of $1,500–$2,500.
| Loan balance | Rate reduction | Annual saving | 20-year total saving |
|---|---|---|---|
| $400,000 | 0.25% | ~$1,000 | ~$20,000 |
| $400,000 | 0.50% | ~$2,000 | ~$40,000 |
| $600,000 | 0.50% | ~$3,000 | ~$60,000 |
| $600,000 | 1.00% | ~$5,700 | ~$110,000 |
| $800,000 | 0.50% | ~$4,000 | ~$80,000 |
Estimates only. Actual savings depend on remaining term and rate compounding.
Even a small rate reduction significantly outweighs typical refinancing costs — provided you are on a variable rate and don’t face fixed-rate break costs.
Refinancing Pitfalls to Avoid
Restarting Your Loan Term
If you refinance a $520,000 loan with 26 years remaining to a new 30-year loan, you reduce your monthly repayment — but you’re also adding 4 years to your loan term. The total interest you pay may increase even at a lower rate. The calculator above shows the impact of this trade-off.
Recommendation: Where possible, refinance to the same or shorter remaining term rather than restarting to 30 years.
LMI on Refinance
If your LVR is still above 80% when you refinance, the new lender will charge LMI again. This can cost $10,000–$30,000 and dramatically reduce the benefit of refinancing. Check your current LVR before starting the refinancing process.
The Loyalty Tax
Australian lenders routinely offer better rates to new customers than to existing ones. APRA data shows the average outstanding variable rate is consistently 0.3–0.7% higher than the average new loan rate. This “loyalty tax” means that staying with your existing lender without renegotiating is often the most expensive option. See our loyalty tax guide.
FAQ — Refinancing in Australia
How often can I refinance?
There’s no legal limit on how often you refinance, but lenders typically require 6–12 months of repayment history before approving a new loan. Frequent refinancing can temporarily affect your credit score due to multiple credit enquiries.
Do I need to tell my current lender I’m refinancing?
No — you apply with the new lender first. Once approved, the new lender handles the discharge of your current loan and settlement of the new one. You will need to formally request a discharge from your current lender, who will provide the discharge figures.
Can I refinance if my property has fallen in value?
If your property value has fallen and your LVR is now above 80%, you may need to pay LMI to refinance — which usually eliminates the benefit. If your LVR is above 90%, some lenders won’t refinance at all. Speak with a mortgage broker about your options.
Is refinancing the same as a product switch?
No. A product switch (or rate switch) stays with the same lender — you change from one loan product to another within the same institution. This is simpler and cheaper but may not give you access to the most competitive market rates. A full refinance moves to a completely new lender.
Results are indicative estimates only. Break costs on fixed rate loans are not accounted for in this calculator and can significantly affect the outcome — always obtain your break cost in writing from your lender. For advice tailored to your situation, speak with a licensed mortgage broker. Find one through MoneySmart.