How refinancing saves money
Refinancing means moving your home loan to a new lender, or a new deal with your current one, at a lower rate. The calculator compares your repayments over the same remaining term, then subtracts switching costs to show your real saving and how long it takes to break even.
What a lower rate is worth
| Rate cut | Monthly saving | Break-even | Saving over 25 years |
|---|---|---|---|
| 0.25% | $78 | 13 months | $22,307 |
| 0.50% | $155 | 7 months | $45,359 |
| 0.75% | $231 | 5 months | $68,151 |
| 1.00% | $306 | 4 months | $90,680 |
$500,000 loan at 6.50%, 25 years left, $1,000 switching costs.
Refinancing costs
Expect a discharge fee from your old lender, state government fees to register the new mortgage and discharge the old one, and possibly application or valuation fees. If your loan is over 80% of the property's value, the new lender may charge lenders mortgage insurance, which can cancel out the saving.
Before you switch
- Ask your current lender to match the new rate. Many do.
- Keep the same loan term, or your repayments drop but you pay more interest overall.
- Check fixed-rate break costs before leaving a fixed loan.
- Look for an offset account if you keep savings.
Common questions
Is it worth refinancing for 0.5%?
Often, yes. On a $500,000 loan over 25 years, a 0.5% lower rate saves about $155 a month. With $1,000 of switching costs, you'd break even in about 7 months.
What does it cost to refinance?
Typically a discharge fee of $150–$400 from your old lender, government fees to register and discharge the mortgage, and sometimes application or valuation fees with the new lender. Many lenders waive their fees or offer cashback.
Will I pay LMI again if I refinance?
If your new loan is more than 80% of the property's value, the new lender will usually charge lenders mortgage insurance again, even if you paid it before.
Should I ask my bank for a better rate first?
Yes. Call your lender, quote a lower rate from a competitor and ask them to match it. Many will, and you save without switching costs.
General information only, not financial or tax advice. Speak to a registered tax agent or licensed adviser about your situation.