Free Calculator

Refinance Calculator

Compare your current home loan against a new rate to see how much you could save by refinancing. Factor in switching costs to get the full picture.

Current Loan

$
%
25 years, 0 months

New Loan

%
25 years, 0 months
$

Include discharge fees, registration, and any break costs.

Monthly Savings
+$158
Current$3,376/mo
New$3,218/mo
Interest Saved
$47,275
Total Savings (incl. costs)
$45,775
Break Even
10 months

to recoup switching costs

This calculator provides estimates only. Actual savings depend on your specific loan terms, fees, and lender policies. Extending your loan term may reduce monthly repayments but increase total interest paid.

Timing

When Does Refinancing Make Sense?

Refinancing is not always the right move. Here are the key scenarios where it typically pays off.

Rate Differential > 0.5%

If your current rate is more than 0.5% above what is available, refinancing often saves money even after switching costs. For a $500K loan, 0.5% saves ~$2,500/year.

Fixed Rate Expiring

When your fixed rate period ends, you typically revert to a higher variable rate. This is the ideal time to refinance — you avoid break costs and can lock in a competitive new rate.

Equity Has Grown

If your property has increased in value or you have paid down your loan, your LVR may now be below 80%. Refinancing could eliminate LMI and access better rate tiers.

Better Features Needed

Your current loan may lack features like an offset account, redraw facility, or the ability to make extra repayments. Refinancing to a more flexible product can save money long-term.

Debt Consolidation

Rolling higher-interest debts (credit cards, personal loans) into your mortgage at a lower rate can reduce total repayments significantly. But be cautious about extending debt over 30 years.

Cashback Offers

Some lenders offer $2,000-$4,000 cashback for refinancing, which can offset switching costs entirely. These offers change frequently — a broker stays on top of the latest deals.

The Complete Guide to Refinancing in Australia

Refinancing your home loan means replacing your current mortgage with a new one — either with your existing lender (sometimes called a "rate review" or "retention") or with a new lender entirely. The primary goal is usually to secure a lower interest rate, but refinancing can also be used to access equity, change loan features, consolidate debts, or restructure your finances.

In Australia, mortgage competition is fierce, with over 100 lenders offering home loans. This competition benefits borrowers — especially those willing to refinance. Research suggests that borrowers who never refinance or negotiate their rate can pay tens of thousands more in interest over the life of their loan compared to those who actively manage their mortgage.

Understanding Break Costs

Break costs are the most significant barrier to refinancing for borrowers on fixed rate loans. When you fix your rate, you enter an agreement with the lender for a set period. If you exit early, the lender may incur a loss — particularly if market rates have fallen since you locked in your rate. The break cost compensates the lender for this loss.

Break costs are calculated using a complex formula that considers the difference between your fixed rate and the current wholesale rate, your remaining loan balance, and the time left on your fixed period. For a large loan with significant rate differential, break costs can reach $10,000-$30,000 or more. However, if market rates have risen since you fixed, break costs may be zero or negligible.

Before refinancing from a fixed rate, always request a break cost estimate from your current lender. Factor this into your calculations to ensure the savings from refinancing outweigh the costs. Our calculator above includes a field for switching costs where you can enter any break costs.

The Hidden Cost: Extending Your Loan Term

One of the most overlooked aspects of refinancing is the impact of resetting your loan term. If you have been paying your mortgage for 5 years on a 30-year term, you have 25 years remaining. If you refinance to a new 30-year loan, you extend your repayment period by 5 years. While your monthly repayments will be lower, the total interest paid over the life of the loan could be significantly higher.

For example, refinancing a $500,000 loan from 6.5% with 25 years remaining to 5.99% with a new 30-year term would reduce your monthly repayment by about $200. However, the total interest paid increases by approximately $40,000 due to the extra 5 years. The optimal strategy is to refinance at a lower rate but keep the same remaining term — or better yet, reduce it. This maximises both monthly savings and total interest savings.

How a Broker Can Help with Refinancing

A mortgage broker adds significant value during refinancing. They can quickly compare rates across 50+ lenders, calculate your total savings including all costs, negotiate with your current lender for a rate match (often saving you the hassle of switching), identify cashback offers and fee waivers, handle the entire application process, and ensure the transition is seamless from discharge to settlement.

Importantly, a broker's service is typically free for the borrower — they are paid a commission by the new lender. This means you get expert advice and access to a wide range of lenders at no additional cost. For refinancing specifically, a broker can also contact your current lender first to see if they will match a better offer, which can save you the time and cost of switching entirely.

Refinancing Checklist
  • Check your current rate against market rates (is the gap greater than 0.5%?)
  • Request a break cost estimate if you are on a fixed rate
  • Calculate total savings including all switching costs
  • Avoid extending your loan term unnecessarily
  • Talk to a broker — they can negotiate with your current lender first

Frequently Asked Questions

Common questions about refinancing your home loan.

When should I refinance my home loan?
You should consider refinancing when: current rates are significantly lower than your existing rate (typically 0.5% or more), your fixed rate period is ending, you want to access equity for renovations or investment, you want to consolidate debts, or your financial situation has changed and a different loan product better suits your needs. Refinancing usually makes sense if the savings outweigh the costs within 2-3 years.
How much does it cost to refinance?
Refinancing costs typically include: discharge fees from your current lender ($150-$400), government registration fees ($100-$400 depending on state), new lender establishment fees ($0-$600), and potentially break costs if you are on a fixed rate. Some new lenders offer cashback deals ($2,000-$4,000) that offset these costs. Your broker can calculate the total cost for your specific situation.
What are break costs and how are they calculated?
Break costs (also called early repayment costs or break fees) apply when you exit a fixed rate loan before the fixed period ends. They are calculated based on the difference between your fixed rate and the current wholesale rate, multiplied by the remaining loan balance and time left on the fixed term. Break costs can range from a few hundred dollars to tens of thousands — always check with your lender before refinancing a fixed rate loan.
Will refinancing affect my credit score?
A refinancing application will result in a hard credit inquiry, which may temporarily reduce your credit score by a small amount (typically 5-10 points). However, if refinancing leads to lower repayments that you manage well, your score should recover and potentially improve over time. Avoid making multiple loan applications in a short period, as each inquiry is recorded.
Can I refinance with bad credit?
It is more difficult but possible. Some non-bank lenders and specialist lenders offer refinancing for borrowers with impaired credit, though rates will be higher. If your credit has improved since taking your original loan, refinancing might still save you money even at a slightly higher rate. A broker can identify lenders who cater to your specific credit profile.
Should I refinance to a fixed or variable rate?
This depends on your view of future rate movements and your risk tolerance. Fixed rates provide certainty — your repayments will not change during the fixed period. Variable rates may be lower initially and allow extra repayments and offset accounts. Many borrowers split their loan — fixing a portion for security while keeping the rest variable for flexibility.
How long does the refinancing process take?
Refinancing typically takes 2-6 weeks from application to settlement. This includes: application and document submission (1-2 days), lender assessment and valuation (1-3 weeks), approval and document signing (3-5 days), and settlement with your existing lender (1-2 weeks). Working with a broker can streamline the process as they handle the paperwork and follow up with lenders.
Can I refinance if I have less than 20% equity?
Yes, but you may need to pay LMI again with the new lender. If your property has decreased in value or you have not built enough equity, refinancing could be more expensive. However, if the rate savings are significant enough to offset the LMI cost, it may still be worthwhile. Some lenders offer cashback or fee waivers that can help offset the LMI.

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Important Disclaimer

Calculator results are estimates only and do not constitute a quote or offer of finance. Actual savings will depend on your individual circumstances, loan terms, fees, and lender policies.

The information on this website is general in nature and does not take into account your personal objectives, financial situation, or needs. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a qualified professional.

Your Finance Guide Pty Ltd (ABN 12 345 678 901) is a Credit Representative (CR 987654) of National Finance Group Pty Ltd (Australian Credit Licence 389328).

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