Refinancing costs

How much will it cost me to refinance?

Learn how to calculate the costs of refinancing your home loan

Many homeowners are aware that they could save money by refinancing their home loan to a different lender. However, have you stopped to consider how much it will cost you to refinance?

The primary reason most people refinance is to reduce the amount of interest they're charged on their home loan and to minimise their repayments.

However, just because a home loan is advertised with a lower interest rate doesn't automatically make it a better option for you.

In some instances, it's possible for the costs to outweigh the benefits of refinancing. Regardless of how appealing a low interest rate may seem, it's important to work out what other costs may apply when switching lenders such as discharge and application fees.

Become familiar with the costs of refinancing to ensure that it's the right choice for you.

Refinancing costs estimate

Although switching home loans now is relatively straightforward, it is important to make sure you are aware of all the costs involved.

Below is a breakdown 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

A breakdown of the fees

Upfront fees

Always check what application fees or establishment fees might apply to your new loan. Just because the interest rate is competitive doesn't mean the associated switching fees will be affordable. You may also want to check whether any other upfront fees apply, as many lenders will break these down into other terms. Look out for things like document preparation fees when reviewing the product details of your new mortgage.

Monthly account fees

It's a good idea to check whether you'll be paying any monthly account-keeping fees on your new home loan. Reducing your interest rate might be appealing, but if you're paying an additional $10 a month on top of your mortgage payment in monthly fees, this may outweigh your cost savings.

Discharge fees

When you refinance your mortgage over to a new lender, your existing bank may charge you discharge fees to exit the loan. These will vary between lenders but could range between $150 - $300 so check how much you'll be paying to exit your current loan.

Break costs

If you're currently in a fixed rate home loan and you want to refinance over to a cheaper variable rate mortgage, you may be liable for break costs. These are calculated to cover any potential losses your old bank will make by you breaking your fixed term contract earlier than the agreed term. Call your current bank and ask them to provide you with a current payout figure. This will give you a clear idea of what break costs may apply if you decide to refinance.

Valuation fee

Refinancing to a new lender requires the lender to conduct their own bank valuation on your property. Valuation generally costs between $200-$300. However, some lenders absorb the cost themselves.

Settlement fees

Sometimes called legal fees or settlement attendance fees, this incorporates the costs to payout your previous lender and to switch the funds to your new mortgage. Settlement costs approximately $60-$200. Once again, settlement costs are sometimes absorbed by the lender and waived for customers.

Government fees

Government fees vary from state to state. There are two general types of government fees for refinancing, these are mortgage deregistration and mortgage registration. The fees can cost between $100-$200 each.

Fixed vs variable

If you're thinking of refinancing from your current variable rate loan over to a fixed rate loan, think about what variable rate the new lender will be charging once the fixed term ends. Just because they might be offering a cheap fixed interest rate now doesn't automatically mean you'll benefit from the same savings once the term expires.

Look at our mortgage comparison calculator that lets you include a fixed term or introductory rate. Enter your figures into this and put the fixed rate in for however many years you want. Then add whatever their current variable rate is.

This calculator will let you compare your current loan to the new loan, giving you a clearer picture of whether the deal is worth proceeding with or not.

Doing the sums

Obviously, if you're going to save thousands of dollars in interest and reduce your monthly repayments at the same time, refinancing your home loan is worth the effort. But you need to be sure that making the switch will be financially viable for you before you sign on the dotted line.

Use our switching cost calculator and run your figures through this. You'll be able to estimate your total refinancing costs.

Top five features to look for when refinancing

Before you make the decision to refinance, think carefully about some of the loan features you want included in your new home loan. Depending on your borrowing needs, you may want to consider the following features:

1. Free redraw facility

If you've made additional payments into your mortgage account, you'll want to pay off your home loan debt as quickly as possible. However, there are times when you may need to access those extra funds. Some lenders will allow you to redraw any extra payments you've made if you need that cash.

Unfortunately, some home loans may charge you a redraw fee to access your own money. Others may place a limit on the minimum amount you're able to redraw at any time, such as restricting you to only redrawing a minimum of $1,000.

If you want to take advantage of this feature, check that there are no redraw fees and be sure you know whether a minimum redraw amount applies.

2. Offset account

The ability to link a 100% offset account to your mortgage can be a great way to reduce the amount of interest you pay on your mortgage. Every dollar you leave sitting in the account actively cuts down the amount of interest your bank charges on your mortgage. The objective is to have your salary and any other household income paid into your offset account so that it reduces your interest. As you need those funds you simply access them the same way you would with any other transaction account. Ideally, you'll be spending less than you earn so you're building up your savings in that account, which reduces your interest and makes it easier for you to repay your mortgage faster.

3. Unlimited extra repayments

Some home loan types will actively restrict the number and amount of extra repayments you make off your loan. This frequently occurs with some fixed rate home loans, although it's not uncommon with some basic variable home loans. You may even find that paying a little more than the minimum amount due could attract penalty fees and charges with these loan accounts if you're not careful.

If you know you're likely to be paying more than the minimum payment and you want to ensure you're able to make extra payments on top of this whenever you have spare cash, check that you won't be penalised for doing so.

4. Portability

If you've already spent 5 years paying down your mortgage and you decide you want to sell your old home and buy a new one, think about exercising the portability option. This allows you to keep your existing mortgage and account numbers, but the bank switches the security property for the loan to show your new home instead of the old one. Coordinating the portability option can sometimes be a little tricky, as the settlement date of your new home purchase has to coincide with the settlement date of the sale for your old home. You also need to ensure the loan amount stays about the same or lower than your existing loan for this to work.

The portability feature can be ideal for saving money. If you decide to pay out your old loan and set up a new one for your new home purchase, you'll usually be up for a whole range of fees, such as discharge fees and establishment fees.

5. Salary crediting

Having your salary paid directly into your home loan account can help reduce the amount of interest you pay each month. This can be especially helpful if you've chosen a home loan with a 100% offset account.

Incentives and benefits

To attract new customers, lenders frequently offer one-time or limited-period incentives, benefits and rebates. These offers come in many forms—cashbacks, slashed rates or fees, or even non-financial incentives such as solar rebates. While these offers are appealing, they are only valid for one time or on a temporary basis.

Does it make financial sense to refinance?

When deciding to refinance, it’s important to compare the fees and charges against the incentives and benefits, as well as the overall performance of your mortgage during its lifetime. Some incentives can help offset the cost of switching home loan providers. Some examples of common incentives include:

  • No or low monthly fees. Typically lasting for one year, the offer of no or low monthly account-keeping fees, annual fees or other ongoing charges for new borrowers is a common feature of home loans.
  • Discounted rates. These could extend to big discounts for interest rates, also typically lasting for an introductory period of 1 year.
  • Rebates. The most common rebate is usually a cashback offer.
  • Packaged benefits. This can be handy if you have many loans spread out over lots of different lenders or if you are transferring your home loan to the provider you typically bank with. In this case, you may be able to pay one annual fee for all of your loans.

If you're looking to refinance, weigh up your options and shop around for the best deal. Take into account the interest rate, features, fees, charges, benefits and incentives to find a refinancing loan that suits your individual lifestyle and financial needs. Keep in mind that you need to carefully calculate any discharge or government fees you'll incur to exit your current mortgage as well as the upfront fees charged by your new lender.

The impact and cost of refinancing is more manageable since exit fees for variable loans were banned in 2011. However, break fees for fixed loans remain which is why it's important to balance any incentives earned by switching with applicable fees and charges.

Understanding how much you will be paying over 30 years is indicative of the loan you are applying for so read on to see what different cash back amounts can save you when refinancing.

Estimated cost of refinancingIncentive benefitDifference
$1,325$1250 cashbackBrings your total cost of refinancing to $75.
$1,325$1000 cashbackBrings your total cost of refinancing to $325.
$1,325$100 cashbackBrings your total cost of refinancing to $1,225.

Review your life insurance policy

If you're looking to refinance your current mortgage, it may be worth reviewing your current life insurance policy. Most insurance consultants will recommend you review your life insurance at least once each year to ensure your cover still measures up to your financial obligations. It could be worth reviewing your policy with an insurance consultant to see if there is a more suitable option available.

Make a free enquiry with an insurance consultant to review your policy

Comparison of Home Loans

Rates last updated September 21st, 2017
$
% p.a.
Offset account
Split account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Maximum LVR Amount Saved Short Description
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.64%
4.83%
$0
$0 p.a.
80%
Owner-occupiers can lock in a competitive rate with no ongoing fees. Conditions apply.
3.49%
4.47%
$0
$375 p.a.
90%
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.74%
3.74%
$0
$0 p.a.
80%
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.64%
3.66%
$0
$0 p.a.
80%
A home loan with a competitive variable rate, limited fees and plenty of flexibility.
3.69%
3.72%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.72%
3.74%
$0
$0 p.a.
80%
Take advantage of a 100% offset account along with no annual or application fees.
3.79%
3.84%
$445
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.86%
3.87%
$0
$0 p.a.
80%
Pay no ongoing fees on a competitive variable rate home loan.
3.69%
4.86%
$0
$395 p.a.
80%
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.74%
4.06%
$0
$299 p.a.
80%
A loan with no application fee and borrow up to 95% LVR.
3.99%
4.02%
$600
$0 p.a.
80%
Take advantage of a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.97%
4.02%
$445
$0 p.a.
80%
Get a competitive rate without features you may not use.
3.84%
3.84%
$0
$0 p.a.
110%
Requires a family member to act as guarantor. Discounted rate available with family pledge loans. Family pledge loans require no LMI and no deposit. NSW, Qld and ACT only.
3.68%
3.69%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.64%
3.64%
$0
$0 p.a.
70%
A basic low-rate home loan that still offers some useful features.
3.77%
3.81%
$200
$0 p.a.
80%
A basic home loan with a low interest rate and a redraw facility available.
3.74%
3.75%
$0
$0 p.a.
70%
A special variable rate home loan with no application or ongoing fees.
3.97%
3.99%
$0
$0 p.a.
80%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.74%
4.81%
$0
$0 p.a.
80%
Get a competitive 2-year fixed rate with no application or ongoing fees.
3.84%
3.84%
$0
$0 p.a.
90%
A competitive variable rate with a redraw facility. NSW, QLD and ACT residents only.
3.96%
3.98%
$0
$0 p.a.
80%
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.88%
4.89%
$0
$395 p.a.
80%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.97%
3.97%
$0
$0 p.a.
80%
A competitive variable rate home loan with no ongoing fees.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
3.64%
4.03%
$0
$395 p.a.
80%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
4.09%
4.12%
$0
$0 p.a.
80%
Access the equity in your home with a competitive interest rate and no application fee.
3.99%
4.02%
$395
$0 p.a.
80%
A flexible low-rate variable home loan that lets you combine your loan with other financial products.
3.69%
4.45%
$0
$375 p.a.
90%
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.83%
3.83%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.74%
3.74%
$0
$0 p.a.
80%
A low rate home loan with no application or ongoing fees. Note that to be eligible for this loan you must be QLD resident.
3.89%
3.91%
$0
$0 p.a.
80%
Package your owner-occupied loan with your investment loan and enjoy low rates for both.
3.69%
4.73%
$0
$0 p.a.
80%
A limited time fixed rate home loan with extra repayment abilities. Conditions apply.
3.79%
3.92%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
4.19%
4.19%
$0
$0 p.a.
80%
100% offset account, unrestricted additional repayments and no monthly account keeping fees
3.69%
4.00%
$0
$350 p.a.
80%
Fix your rate for 3 years and borrow up to 95% LVR.
3.99%
4.77%
$0
$0 p.a.
80%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.74%
4.85%
$0
$0 p.a.
80%
Enjoy a low interest rate and borrow up to 95% (with LMI) of your property's value.
3.54%
3.54%
$440
$0 p.a.
80%
Borrow up to 80% LVR with no ongoing fees and a 100% offset account.
4.33%
4.33%
$363
$0 p.a.
70%
A variable home loan with $0 annual or monthly fees.
3.80%
3.81%
$0
$0 p.a.
80%
A no frills loan with a competitive rate and a maximum LVR of 95%.
4.03%
4.07%
$0
$0 p.a.
80%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.88%
4.47%
$0
$0 p.a.
80%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$600
$0 p.a.
80%
Get a low variable rate along with some important basic features.
3.79%
3.79%
$0
$0 p.a.
80%
Minimum loan amount for this basic home loan is $750001.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
80%
Lock in a fixed interest rate term for repayment certainty.
3.69%
4.03%
$0
$299 p.a.
80%
Enjoy a low variable rate with no application fee.
3.99%
4.99%
$0
$395 p.a.
80%
A package home loan with fee free extra repayments available during the fixed term.
3.99%
4.98%
$0
$395 p.a.
80%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.99%
4.90%
$0
$395 p.a.
80%
Lock in a discounted fixed rate with a low service fee.
3.65%
3.66%
$0
$0 p.a.
80%
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.

Have we missed anything in the comparison table? Tell us

Compare up to 4 providers

Staying with your current lender

The whole idea of refinancing your home loan is to ensure that you're getting the best deal available and the best value for your money. Keep in mind that your existing lender should be your first port of call when you consider refinancing, as you may be able to negotiate a better rate or fees.

No matter how competitive a deal may be, take a few moments to call your current bank. Tell them about the offer you've found and ask if they're willing to match it. You'll be surprised at how willing banks are to negotiate if they think you're going to refinance to a new lender.

About information on refinancing with your current lender

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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2 Responses

  1. Default Gravatar
    MitchAugust 29, 2017

    I’m currently employed and have a mortgage in a joint account, I have recently been issued with a Judgement. The plaintiff is within days of declaring me Bankrupt. They have given me a deadline to prove that I have tried to refinance so I can pay out the debt. $30k we have $550k left on the Mortgage. Its likely I will be separated with my wife due to this matter, my question is can I refinance my half of the outstanding mortgage off only $30k, we have equity off about $260k. Our property recently was valued over $840k.
    The debt collectors tell me I should be able to get a none Conforming Lender, to lend me the $30k is there any options for me.

    • Staff
      GruAugust 29, 2017Staff

      Hello Mitch,

      Thank you for visiting finder, we are an Australian financial comparison website and general information service.
      As a friendly reminder, while we do not represent any company we feature on our pages, we can offer you general advice.

      To help you decide on your options and read information on how to refinance to a non-conforming home loan, you may visit this page –> link..

      It’s also best to speak to a mortgage broker who can also help you look for the right home loan refinancing for you.
      - Mortgage Brokers

      If you have other questions or need clarification, please do not hesitate to reach out to us again.

      Cheers,
      Gru

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