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Refinancing is worth it when the interest you save over the time you'll keep the loan is bigger than the cost of switching. For most borrowers that cost is a discharge fee, government registration fees and any new-lender fees, plus break costs if you are fixed and lenders mortgage insurance if you have less than 20% equity. Moneysmart notes that variable rates on the market can differ by more than 2%, so checking is worth the effort.
This page lists every refinancing cost, shows how to calculate your break-even point, explains what can stop a refinance (the APRA serviceability buffer is the usual one) and walks through the switch step by step.
By Better Rate Mate Editorial Team · Last reviewed
When you refinance, a new loan pays out your existing one. You apply to the new lender, it values your property and assesses your income and expenses, and at settlement it pays your old lender, which discharges its mortgage. The new lender then registers its own mortgage on your title. You can also refinance internally, by asking your current lender to move you to a better product or rate.
Refinancing is a fresh credit assessment. A bank will test whether you can afford the loan at its rate plus APRA's 3 percentage point serviceability buffer, and it will look at your credit file and your repayment history on the current loan.
The costs fall into four groups: what your current lender charges to exit, what the state land registry charges to discharge and register mortgages, what the new lender charges to set up, and conditional costs (break costs and LMI) that only apply in some situations. Lenders' own setup fees vary widely, from nothing at all to several hundred dollars.
| Cost | Who charges it | When it applies | Examples from lenders we review |
|---|---|---|---|
| Discharge (termination) fee | Your current lender | Almost always, when you close the loan | ubank lists $300 per property |
| Mortgage discharge and registration fees | State or territory land titles office | Every external refinance | Set by each state; check your land titles office |
| Application, establishment or documentation fee | New lender | Depends on the lender | Unloan $0; Macquarie $350 documentation fee; Suncorp Bank $600 below 90% LVR ($0 in its package); ubank $250 loan advance fee |
| Valuation | New lender | Usually covered for standard loans | BOQ Clear Path: one free valuation; ubank covers the first up to $360 |
| Break costs | Current lender | If you leave during a fixed term | Depends on how far rates have moved since you fixed |
| Lenders mortgage insurance | New lender (charged to you) | If you borrow more than about 80% of the value | A new premium; the old one generally isn't transferred |
| Package or ongoing fees | New lender | If the new loan has them | $395 a year at CommBank, Westpac and St.George; $0 at ANZ (per ANZ) |
Work out your monthly saving, add up the switching costs, and divide the costs by the saving. That gives the number of months before you are ahead. If you might sell or refinance again before then, the switch probably isn't worth it.
Illustration only: on a $600,000 loan with 25 years left, cutting the rate from 6.74% to 6.24% lowers the monthly principal and interest repayment from about $4,142 to about $3,954, a saving of about $187 a month. If switching costs $1,500 in total, you are ahead after about eight months. Keep the same remaining term when you compare: Moneysmart warns that stretching the loan back out to 30 years lowers repayments but can increase the total interest you pay.
| Current loan | New loan | |
|---|---|---|
| Interest rate (illustrative) | 6.74% | 6.24% |
| Monthly repayment | $4,142 | $3,954 |
| Monthly saving | $187 | |
| Switching costs (assumed) | $1,500 | |
| Months to break even | About 8 |
There is no official '2% rule'. The figure people usually mean comes from Moneysmart's observation that variable rates on the market can differ by more than 2%, which is a reason to check your rate regularly, not a threshold you must hit. A smaller rate cut can still be worth it on a large loan with cheap switching costs, and a bigger one can fail to pay off if you face break costs or a new LMI premium. Run the break-even sum above instead.
The most common obstacle is serviceability. Banks assess you at their rate plus a buffer of at least 3 percentage points (APRA's expectation, unchanged since October 2021), so if rates or your debts have risen since you took out the loan, you may not qualify for the same amount even though you are paying it today. Since 1 February 2026 APRA has also capped the share of banks' new lending at a debt-to-income ratio of six or more at 20%, which can matter for heavily geared borrowers.
Before you switch lenders, ask your current lender to match the rate it offers new customers. An internal switch avoids discharge and registration fees and a new credit assessment for the same loan amount. Some lenders do this automatically: Athena, for example, passes new-customer rate cuts to existing customers on like-for-like loans. Be aware that some banking groups exclude refinances between their own brands from new-customer offers (the Westpac Group does this across Westpac, St.George, Bank of Melbourne and BankSA).
Most refinances take a few weeks from application to settlement.
It is worth it when the interest you save over the time you'll keep the loan is more than the cost of switching. Divide your total switching costs by your monthly saving to find how many months it takes to break even.
The loan size affects the interest saving more than the fees. Expect a discharge fee from your current lender, state government discharge and registration fees, and whatever setup fee the new lender charges, which ranges from nothing (Unloan) to several hundred dollars. Break costs and LMI are extra if they apply.
It isn't an official rule. Moneysmart notes that variable rates on the market can differ by more than 2%, which is why it's worth checking. Whether a smaller difference is worth switching for depends on your costs and loan size.
Usually serviceability: banks assess you at their rate plus a 3 percentage point buffer. Too little equity, recent missed repayments, reduced income or new debts can also stop a refinance.
When your fixed term is ending (no break costs), when your equity has grown past 20% (no LMI), or when your rate is well above what new customers are being offered. The RBA's Monetary Policy Board meets eight times a year, and lenders often reprice after its decisions.
Typically a few weeks, depending on the valuation, how quickly you provide documents and how long your current lender takes to process the discharge.
We don't quote lenders' interest rates: they change daily and with every RBA decision, and we don't have a live rate feed. The averages we quote are the RBA's published figures for the month shown. Always get the lender's key facts sheet, which shows the rate and comparison rate for your loan amount.
