Calculate how much you could save by refinancing your home loan. Includes break cost analysis for fixed-rate loans and true cost comparison.
📖 15 min read · ⏱️ Calculator time: ~45 seconds
Add detail below for a full itemised comparison, amortisation schedule and charts. This replaces the single "Refinance fees" estimate above with itemised costs.
| Item | Current | Refinanced |
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Results are estimates only. Actual rates, fees and approval depend on your lender's assessment — confirm exact figures before proceeding.
| Year | Opening balance | Principal paid | Interest paid | Closing balance |
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Refinancing means replacing your existing home loan with a new one — either with your current lender (an "internal refinance" or rate switch) or a different lender entirely — usually to secure a lower interest rate, access equity, consolidate debt, or get features your current loan lacks, like an offset account. The new loan pays out the old one in full, and you begin repaying the new loan under its own rate, term and conditions.
Refinancing can save thousands but involves costs. The "break-even point" is when your cumulative monthly savings exceed the total refinancing costs. Most Australians benefit from reviewing their home loan every 2–3 years.
If you exit a fixed rate loan early, your lender may charge a break cost (also called an early repayment adjustment). This can be substantial — sometimes tens of thousands of dollars. Always obtain a written break cost quote before refinancing.
With the RBA cash rate at 4.35% in 2026 following several increases, many borrowers are now paying higher rates than they were 18 months ago. Refinancing can make sense when you can secure a meaningfully lower rate, but the key question is always whether the interest saving justifies the switching costs — and how long it takes to break even.
The break-even period is the number of months of interest savings required to recover the total cost of refinancing. If you plan to stay in the property (or keep the loan) longer than the break-even period, refinancing is financially worthwhile.
| Scenario | Loan Balance | Current Rate | New Rate | Monthly Saving | Refinancing Costs | Break-Even |
|---|---|---|---|---|---|---|
| Good deal | $500,000 | 7.2% | 6.4% | ~$267/month | $1,200 | ~4.5 months |
| Marginal deal | $400,000 | 6.9% | 6.5% | ~$133/month | $1,000 | ~7.5 months |
| Poor deal | $250,000 | 6.8% | 6.5% | ~$63/month | $1,500 | ~24 months |
| Cost | Typical Amount | Who Charges It |
|---|---|---|
| Discharge fee | $150 – $400 | Your current lender |
| Application / establishment fee | $0 – $600 | New lender |
| Mortgage registration fee | $100 – $200 (varies by state) | State government |
| Valuation fee | $0 – $300 (often waived) | New lender |
| Fixed rate break costs | $0 – $30,000+ | Current lender (if on fixed rate) |
| Total (variable to variable) | $350 – $1,200 typical | — |
Australian borrowers who stay with their lender on the standard variable rate often pay 0.5–1.0% more than new customers on introductory rates — a gap sometimes called the "loyalty tax." ACCC research has confirmed this pattern. Before incurring the costs of refinancing to another lender, it is always worth calling your existing lender and requesting a rate review citing competitive offers. Many borrowers achieve a rate reduction of 0.2–0.5% through a single phone call.
Some borrowers refinance to access equity built up in their property — borrowing more than the existing loan balance to fund renovations, investment, or other purposes. This is called cash-out refinancing or equity release. It increases your loan balance and repayments and should be evaluated on the cost of the additional borrowing rather than the overall rate comparison.
This is one of the biggest decisions in any refinance. Variable rates move with the market — you benefit immediately from rate cuts but are exposed to rate rises, and in exchange you typically get full flexibility: unlimited extra repayments, a 100% offset account, and free redraw. Fixed rates lock in your repayment for 1–5 years, giving budgeting certainty, but usually cap extra repayments (often $10,000–$30,000 per year), rarely offer a genuine offset account, and can trigger break costs if you exit early or exceed the cap. A split loan — part fixed, part variable — is a popular middle ground, letting you lock in certainty on a portion while retaining flexibility on the rest. Use the "New rate type" selector in the calculator above to see the relevant considerations for your choice.
| Feature | Fixed Rate | Variable Rate |
|---|---|---|
| Repayment certainty | Locked in for the fixed term | Can rise or fall with the market |
| Extra repayments | Usually capped ($10k–$30k/year typical) | Usually unlimited |
| Offset account | Rarely available, or partial only | Usually available, often 100% |
| Exiting early | Break costs may apply | Generally no penalty |
| Best suited to | Borrowers who value budget certainty | Borrowers who want flexibility and may pay extra |
An offset account is a linked transaction account whose balance is subtracted from your loan balance before interest is calculated each day. If your current loan doesn't have one — or only offers a partial offset — gaining full offset access can itself be worth refinancing for, independent of the headline rate. On a $500,000 loan, a $30,000 offset balance held consistently can save tens of thousands in interest over the loan's life. Use the "Offset account balance" field in the Advanced Refinance Analysis above to see this reflected directly in your new loan's total interest and payoff time.
Many Australian lenders offer cash-back incentives (commonly $1,000–$4,000) to attract refinancers. These can genuinely offset your switching costs — sometimes covering them entirely, as the Advanced Cost Breakdown above shows when cashback exceeds your itemised costs. But don't let a cashback offer distract from the bigger picture: a slightly higher ongoing rate can easily cost more over several years than a one-off cashback is worth. Also check the fine print — many cashback offers require you to stay with the lender for a minimum period (commonly 1–4 years) or repay a pro-rated amount if you leave early.
Lenders assess a refinance application much like a new loan application — verifying income, expenses, existing debts and the property's current value, under the same APRA-mandated 3 percentage point serviceability buffer applied to new lending. This means your capacity to refinance depends on your current financial position, not just your existing loan's payment history — a change in income, a new dependant, or increased other debts since your original loan can all affect approval, even if you've never missed a repayment. Most major lenders also require a minimum time since your last refinance or offer (commonly 3–6 months) before a new cashback or introductory offer applies, and some retention teams can only match — not necessarily beat — a competitor's rate.
Australian borrowers who stay with their lender on the standard variable rate often pay 0.5–1.0% more than new customers on introductory rates — a gap sometimes called the "loyalty tax." ACCC research has confirmed this pattern. Before incurring the costs of refinancing to another lender, it is always worth calling your existing lender and requesting a rate review citing competitive offers. Many borrowers achieve a rate reduction of 0.2–0.5% through a single phone call.
Take a $500,000 loan with 25 years remaining at 6.75%. Refinancing to 6.15% with $537 in itemised costs (discharge fee + government registration) and a $2,000 cashback offer produces an immediate net gain — the cashback alone exceeds the switching cost, so there's no break-even wait at all. Add a $20,000 offset balance and $300/month in extra repayments on the new loan, and the picture improves further: total interest drops substantially and the loan finishes years earlier than the original 25-year term, as shown in the Advanced Savings panel and amortisation schedule above. This is the value of running both the quick comparison and the advanced analysis together — the quick figure shows whether the rate difference alone is worth it, and the advanced figure shows the full picture once your actual repayment behaviour is factored in.
| Term | Meaning |
|---|---|
| Break-even period | Time for cumulative savings to recover total switching costs. |
| Break cost | Fee for exiting a fixed rate loan early (Early Repayment Adjustment). |
| Comparison rate | Interest rate plus most fees, for fairer comparison between loans. |
| Cashback offer | A one-off cash incentive some lenders pay to attract refinancers. |
| Discharge fee | Fee your current lender charges to close out the old loan. |
| Offset account | A linked account whose balance reduces the interest charged on your loan. |
| LVR | Loan-to-Value Ratio — loan balance as a percentage of property value. |
| LMI | Lenders Mortgage Insurance — may apply again on refinance if LVR exceeds 80%. |
| Cash-out refinance | Refinancing to a larger loan and receiving the difference in cash. |
| Split loan | A mortgage divided between fixed and variable portions. |
Refinancing is one of the few genuinely "free money" moves available to Australian homeowners — but only when the maths actually stacks up once every cost is counted. Use the quick calculator above for an instant read on whether the rate difference alone is worthwhile, then switch to the Advanced Refinance Analysis for the complete picture: itemised costs, cashback, offset accounts, extra repayments, and a proper amortisation schedule. Export your results as a CSV or PDF, share a link with a partner or broker, and always confirm your final numbers — especially any break cost — in writing with your lender before you commit.
How do I know if refinancing is worth it?
Calculate your break-even period: divide the total switching costs by your monthly interest saving. If you'll stay in the property or loan longer than the break-even period (ideally under 18 months), refinancing is financially worthwhile. The calculator above does this automatically when you enter your current rate, new rate, and switching costs.
How much does it cost to refinance a home loan in Australia?
Refinancing from one variable rate loan to another typically costs $350-$1,200 in discharge fees, application fees, and mortgage registration. If you're on a fixed rate, break costs can add thousands more. Always request a written break cost estimate from your current lender before proceeding with any fixed-to-variable refinance.
What is the minimum rate difference that makes refinancing worthwhile?
On a large loan, even 0.3-0.4% difference can recover switching costs within 12-18 months. On a smaller loan, you generally need at least 0.5-0.6% difference for a quick break-even. The key metric is the absolute monthly saving in dollars, not just the percentage difference.
Can I refinance if my property value has dropped?
If your property value has fallen and your LVR is now above 80%, refinancing becomes more difficult. Most lenders require LVR below 80% for standard rates. If LVR is above 80%, you may need to pay LMI again at the new lender, which changes the break-even calculation significantly.
What is cash-out refinancing?
Cash-out refinancing means borrowing more than your existing loan balance when refinancing — the extra amount is paid to you in cash. It is used to fund renovations, investments, or other expenses. The additional amount is typically limited by your available equity (generally to 80% LVR). The extra borrowing increases your loan balance, repayments, and total interest.
Should I refinance to a fixed or variable rate?
This depends on your view of future rate movements and your need for certainty. Fixed rates lock in your repayment but restrict extra repayments and offset accounts. Variable rates offer flexibility but expose you to rate changes. A split loan (part fixed, part variable) is popular for balancing both. Current rates in 2026 have fixed and variable at broadly similar levels, with market opinion divided on whether the next RBA move is a hold, hike or cut.
What is refinancing?
Refinancing means replacing your existing home loan with a new one, either with your current lender or a different one, usually to get a lower rate, access equity, or gain features like an offset account. The new loan pays out the old one in full.
When should you refinance your home loan?
Consider refinancing when you can secure a meaningfully lower rate, when your fixed term is ending, when your LVR has improved enough to remove LMI, or when you want features (like an offset account) your current loan lacks. The right time also depends on how long you plan to stay in the loan relative to the break-even period.
What refinance costs should I budget for?
Typically a discharge fee ($150-$400) from your current lender, an establishment fee ($0-$600) from the new lender, government registration fees ($100-$200), and a valuation fee ($0-$300, often waived). If you're on a fixed rate, budget for a possible break cost, which can range from nothing to tens of thousands of dollars.
How is the break-even period calculated?
Break-even months = total refinancing costs ÷ monthly interest saving. If you'll keep the loan longer than this period, refinancing is financially worthwhile. The calculator above computes this automatically from your entered figures, including the itemised advanced costs if you use the Advanced Refinance Analysis.
What is an offset account and why does it matter when refinancing?
An offset account is a linked transaction account whose balance is subtracted from your loan balance before interest is calculated. Gaining full offset access can itself be worth refinancing for — a loan without one can cost more in practice than a slightly higher-rate loan that includes it.
Are cashback offers worth chasing when refinancing?
They can genuinely offset your switching costs, sometimes entirely — but don't let a one-off cashback distract from the ongoing rate, which matters far more over several years. Also check for minimum-stay conditions; many cashback offers require repayment if you switch lenders again within 1-4 years.
What are the main risks of refinancing?
Resetting to a fresh loan term can increase total interest even at a lower rate if you don't maintain your previous repayment level; fixed rate break costs can be substantial; LMI may apply again if your LVR is above 80% at the new lender; and multiple credit enquiries in a short period can affect your credit file.
What common mistakes do people make when refinancing?
Comparing headline rates instead of comparison rates, ignoring the break-even period, not getting a written break cost quote before leaving a fixed rate, skipping a call to their current lender for a retention offer, and unintentionally extending their loan term without adjusting repayments to compensate.
How do Australian lenders assess a refinance application?
Much like a new loan application — verifying your income, expenses, existing debts and the property's current value, under the same APRA-mandated serviceability buffer applied to new lending. Your current financial position matters more than your repayment history on the existing loan.
Can I refinance with the same lender?
Yes — this is often called an internal refinance or rate switch, and can be simpler and cheaper than moving to a new lender since it avoids discharge and full re-application costs in many cases. It's worth requesting before assuming you need to switch lenders entirely.
Does refinancing reset my loan term?
Yes, unless you specifically request a shorter term to match your remaining years. Refinancing to a fresh 25-30 year term after already paying down several years can increase total interest paid, even at a lower rate, if you don't keep your repayments at the previous (higher) level.
What is the "loyalty tax" in Australian home loans?
Borrowers who stay with their lender on the standard variable rate often pay 0.5-1.0% more than new customers get on introductory rates — a pattern confirmed by ACCC research. A single phone call requesting a rate review, citing competitor offers, often achieves a 0.2-0.5% reduction without the cost of switching lenders.
Can I refinance to consolidate debt?
Yes — rolling higher-interest debts like credit cards or personal loans into your home loan during a refinance can lower the overall interest rate, but converts unsecured debt into debt secured against your home over a much longer term, so it should be paired with discipline about not re-accumulating the original debt.
Do I need a new valuation to refinance?
Usually yes — the new lender needs to confirm your property's current value to assess your LVR. Many lenders offer a free desktop valuation; a full valuation may cost $0-$300 depending on the lender and property.
How long does refinancing take in Australia?
Typically 2-6 weeks from application to settlement, depending on the lender, valuation turnaround, and whether you're refinancing internally or to a new lender. Discharge authority processing with your current lender can also add time.
Will refinancing affect my credit score?
A refinance application generates a credit enquiry, which can have a small, temporary effect on your credit score. Applying with multiple lenders in a short window compounds this effect, so it's worth narrowing your options before formally applying.
Can I refinance an investment property loan?
Yes — the process is similar to refinancing an owner-occupied loan, though lenders may apply slightly different serviceability calculations and rates for investment loans. Interest deductibility rules also continue to apply based on how the loan funds are used.
What happens to my offset account balance when I refinance?
Your existing offset balance stays with your current account when the old loan is discharged — it doesn't automatically transfer. You'll need to move those funds into the new loan's offset account (if it has one) once the refinance settles.
Is it worth refinancing for a small rate reduction?
On a large loan balance, even a 0.2-0.3% reduction can be worthwhile if switching costs are low and you'll keep the loan for a while — the calculator above shows this precisely. On a smaller balance, you generally need a bigger rate gap to clear the switching costs within a reasonable break-even period.