The hidden costs of transferring a home loan to another bank

Watch out for the costs of refinancing your mortgage to get the most out of switching

Although refinancing to a new lender can lead to significant cost savings, you need to ensure that you're fully aware of the costs involved.

While you may have found a new lender with a more competitive rate, minimal ongoing costs or better features compared to your existing mortgage, refinancing can be an expensive process. Before you transfer your home loan, do your research to make sure you're actually coming out ahead.

The costs of switching mortgages

  • 1. Lenders Mortgage Insurance (LMI). When you switch financial institutions, the new lender may require a new property valuation. If your new valuation is lower than planned, you may be required to pay mortgage insurance. To avoid this, your loan amount must not be higher than 80% of the new valuation. If not, you could potentially be adding a significant amount of money to the cost of your loan. Ask your mortgage broker for an upfront valuation before proceeding with your refinance application to ensure that your current valuation is on track.
  • 2. Mortgage Discharge Fees. Don’t confuse these with exit fees. Check your loan agreement to see if your lender charges a discharge fee when you close your home loan account. This could range from $150- $500. With government charges, expect to pay around $1,000 in total. It's always worth talking to your lender to look for cost reductions when discharging your mortgage.
  • 3. Break Costs on Fixed Rate Loans. When you break a fixed-term loan, your financial institution will charge you for not fulfilling the agreed terms. The amount you pay will vary according to the interest rate your fixed loan was secured under, the current interest rate and the duration of your loan. Charges can often run in the thousands if poorly managed.
  • 4. Switching fees. This is a fee you may have to pay when refinancing internally (staying with your current lender but switching to a different mortgage product).
  • 5. Direct Debits. One of the biggest difficulties in switching lenders is managing direct debits from your nominated account. If not done well, you could be hit for “over the limit” and cheque dishonor fees. It can be time-consuming to not only change your main account and mortgage, but also update details with other institutions that access your accounts for regular payments.
  • 6. New Application Fees. Your new mortgage will incur upfront application fees and mortgage registration fees which you need to take into account. Application fees typically range from $400 to $750 and mortgage registration varies per state, starting at $100 to $140.
  • 7. Stamp Duty. You may be liable to pay stamp duty when refinancing. Expect to pay around 0.35% of the loan value plus GST. To get an estimate you can use our stamp duty calculator.

Refinancing costs estimate

To give you a clearer example of the costs above, we've broken down an example estimate of the fees you may face when refinancing your mortgage. Note that some of these fees can vary from one lender to another.

Expense typeCost
Discharge fees$100-$200
Mortgage deregistration fee$120 (varies according to state)
Mortgage registration fees$120 (varies according to state)
Application fee$500
Settlement fee$75
Bank valuation fee$220
Title search fee$30
Preparation of mortgage documents$100
Total refinancing costs:$1,325

You can also use our calculator below to estimate your total switching costs.

Switching costs for 9 popular loans

ProductSwitching feeDischarge feeLegal feeValuation feeSettlement feeTotal
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000​N/AN/AN/AN/AN/A$0
loans.com.au Essentials - Variable (Owner Occupier, P&I)$260$300N/A$220$300$1,080
Tic:Toc Live in Loan Variable Rate - Principal & InterestN/A$325N/AN/AN/A$325
ME Flexible Home Loan With Member Package - LVR <=80% $400k up to $699,999 (Owner Occupier, P&I)N/A$300N/A$200N/A$500
Yellow Brick Road Rate Smasher Home LoanN/A$400$330N/AN/A$730
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150k+ Owner Occupier, P&I) Discount 1N/AN/AN/AN/AN/A$0
Macquarie Bank Basic Home Loan - LVR up to 70% (Owner Occupier, P&I)$250$400$330 +GSTAt cost above $300N/A$1,280
Virgin Reward Me Variable Home Loan - LVR <= 80% ($750k+ Owner Occupier, P&I)N/A$320N/AN/AN/A$320
CUA Balanced Variable Home Loan - New Lending only (Owner Occupier, P&I)N/A$500N/AN/A$195$695

If you're interested in switching to a cheaper or better home loan, then start comparing your options in the table below.

Refinancing Home Loan Comparison

Rates last updated July 17th, 2019
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.34%
3.34%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.09%
3.05%
$0
$0 p.a.
80%
Low variable rate mortgage for owner occupiers looking to switch. Refinancers only.
3.29%
3.32%
$600
$10 monthly ($120 p.a.)
70%
A very low variable interest rate for home buyers with a 30% deposit. This product has a 100% offset account.
3.48%
3.92%
$0
$395 p.a.
80%
A low variable rate loan with a 100% offset account and package discounts.
3.15%
3.17%
$0
$0 p.a.
80%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. This rate is effective from 24 July, but you will be eligible for it if you apply today.
3.29%
3.32%
$600
$10 monthly ($120 p.a.)
80%
A competitive variable rate for home buyers with a 20% deposit. This product has a 100% offset account.
3.43%
3.76%
$0
$299 p.a.
80%
Get a 100% offset account and a competitive, variable interest rate, plus no application fee.
3.43%
4.06%
$0
$395 p.a.
80%
Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.
3.49%
3.45%
$0
$0 p.a.
80%
A competitive variable mortgage for investors looking to refinance. Principal and interest repayments. Refinancers only.
3.38%
3.41%
$0
$0 p.a.
80%
This low, variable rate loan has no ongoing fees and a redraw facility. Requires a 20% deposit.
2.99%
3.86%
$395
$0 p.a.
80%
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
3.73%
4.58%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.59%
3.24%
$0
$0 p.a.
80%
Variable interest only mortgage for owner occupied refinancers. Refinancers only.
3.69%
4.89%
$300
$10 monthly ($120 p.a.)
80%
Special offer for new lending between $150k-$500k & under 80% LVR.
3.39%
3.41%
$0
$0 p.a.
80%
A competitive rate for home buyers with a 20% deposit. Enjoy repayment flexibility and very low fees.
2.99%
3.63%
$395
$0 p.a.
80%
A competitive fixed interest rate product with no ongoing bank fees.
3.64%
3.64%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.65%
3.66%
$500 (if over 80% LVR)
$0 p.a.
80%
A competitive variable mortgage for home buyers. This loan has flexible repayments and an optional redraw facility.
3.54%
3.97%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.54%
3.55%
$0
$0 p.a.
70%
A competitive, discounted variable interest rate for home buyers.
3.72%
3.74%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.49%
3.52%
$500
$0 p.a.
95%
This mortgage combines a very sharp interest rate with a 100% offset account and it's available with a 5% deposit.
2.79%
4.38%
$0
$395 p.a.
90%
Get one of the lowest fixed mortgage rates on the market plus a 100% offset account. Available with just a 10% deposit. Guarantor option available. NSW, QLD and ACT residents only.
3.14%
3.67%
$395
$0 p.a.
80%
A competitive 3 year fixed rate with no ongoing bank fees.
3.57%
3.58%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.14%
3.87%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.19%
4.25%
$300
$10 monthly ($120 p.a.)
80%
A low fixed rate loan that lets you borrow up to 90% of your property's value.
3.29%
4.33%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.

Compare up to 4 providers

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Important Information*
Logo for UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.34% p.a. and a 3.34% p.a. comparison rate.

Logo for HSBC Home Value Loan - (Owner Occupier P&I)
HSBC Home Value Loan - (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit. This rate will drop to 3.27% pa interest rate / 3.28% pa comparison rate on 22 July. If you apply now you will be eligible for this lower rate.

Logo for Athena Variable Home Loan - Refinance (Owner Occupier, P&I)
Athena Variable Home Loan - Refinance (Owner Occupier, P&I)

Low variable rate mortgage for owner occupiers looking to switch. Refinancers only.

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2 Responses

  1. Default Gravatar
    KarenJanuary 21, 2017

    Currently have $275000 mortgage with Bankwest interest rate is 5.3%
    Morgage house offering 3.49%
    Is it worth changing loans what will my discharge fee be with Bankwest

    • Avatarfinder Customer Care
      DeeJanuary 23, 2017Staff

      Hi Karen,

      Thanks for your question.

      While I can’t answer if changing your lender is indeed the best option for you, our home refinancing guide on this page can help you make the right decision. On the same page, we have also listed the true cost of refinancing as well as your refinancing options.

      Before refinancing, you may want to get in touch first with Bankwest and see if you can negotiate a lower rate. They are also able to compute the discharge fee of your loan in case you want to refinance.

      Cheers,
      Anndy

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