Refinance your home loan: costs, savings and how to switch
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.
Use the refinance calculator below to see your monthly saving and how many months the switch takes to pay for itself. This page then lists every refinancing cost, explains what can stop a refinance (the APRA serviceability buffer is the usual one) and walks through the switch step by step.
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General information only. It doesn't take into account your objectives, financial situation or needs. Check the lender's key facts sheet, credit guide and TMD before you apply. We don't compare every lender, and we may earn a commission if you apply through our links.
Refinance calculator
Enter your balance, your current rate, the new rate and your switching costs to see the monthly saving and how many months the switch takes to pay for itself.
Refinance break-even calculator
Your monthly saving, the switching costs and how long it takes to get them back.
You'd save each month
$156
Enter your switching costs above to see how long it takes to recover them.
| Repayment now | $3,448 a month |
|---|---|
| Repayment after switching | $3,292 a month |
| Switching costs less cashback | $0 |
| Interest saved over 2 years | $4,998 |
| Interest saved over 5 years | $12,446 |
| Interest saved over the 25 years left, less net costs | $46,823 |
This keeps the same years left on the loan. Starting a new 30-year term lowers the repayment further but adds interest. A new lender will also test you at its rate plus 3 percentage points: run the stress test.
How refinancing works
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.
Why people refinance
Most refinances come down to one of six reasons. Each has a cost to weigh against the benefit.
- A lower interest rate. Lenders compete hardest for new customers, so your rate may now be above what lenders, including your own, offer new borrowers. Moneysmart notes that variable rates on the market can differ by more than 2%.
- Access to equity. If your home has risen in value or you've paid the loan down, refinancing can release equity for renovations or other needs. You are turning equity back into debt and paying interest on it.
- Consolidating debts. Rolling a personal loan or card debt into the mortgage gives one repayment at a lower rate, but Moneysmart warns it can cost more if you take longer to pay the debt off, and the debt becomes secured against your home.
- Switching between fixed and variable. Check the break cost before you leave a fixed rate early; see fixed vs variable home loans.
- Features you'll use, such as an offset account, redraw or a split loan.
- A different loan term. A longer term lowers repayments but adds interest, so Moneysmart suggests keeping the new loan to a similar length to the years left on your current one.
What does it cost to refinance a home 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: see transfer and mortgage registration fees by state |
| Application, establishment or documentation fee | New lender | Depends on the lender | Unloan $0; Macquarie $350 documentation fee; 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) |
How to work out whether refinancing is worth it
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 6.73% to 6.23% lowers the monthly principal and interest repayment from about $4,138 to about $3,951, a saving of about $187 a month. If switching costs $1,500 in total, you are ahead after about 9 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.
Our refinance calculator does this sum for you: enter both rates and the switching costs to see the monthly saving and how many months it takes to break even.
| Current loan | New loan | |
|---|---|---|
| Interest rate (illustrative) | 6.73% | 6.23% |
| Monthly repayment | $4,138 | $3,951 |
| Monthly saving | $187 | |
| Switching costs (assumed) | $1,500 | |
| Months to break even | About 9 |
What is the 2% rule for refinancing?
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.
What can stop you refinancing?
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.
- Less equity than the lender's maximum LVR (Unloan, for example, needs an LVR of 90% or less)
- Recent missed or late repayments on your current loan
- A fall in income, a new job still in probation, or new debts such as a car loan
- Property types some lenders restrict, where they may only lend up to 70% of the value
- A fixed rate whose break cost outweighs the saving
Which bank is offering the lowest mortgage rates in Australia?
No single bank is cheapest for every borrower. Lenders price by loan purpose, repayment type, LVR and loan size, and many reserve their sharpest rates for online applications or new customers, so the cheapest lender for one borrower can be dear for another. As a benchmark, new owner-occupier variable loans averaged 6.23% in August 2026 on the RBA's figures (all lenders, published 8 October 2026).
Advertised rates change every week, and most lenders repriced after the RBA's 29 September 2026 decision. Compare the comparison rate for your loan amount on each lender's key facts sheet, and ask your current lender to match the best offer. Our lender reviews set out how each lender prices its loans; we don't rank them.
Is now a good time to refinance?
It depends on your loan, not on the market. Rates rose after the RBA lifted the cash rate target to 4.60% on 29 September 2026, which made the gap between what existing borrowers pay and what lenders offer new customers more important, not less. The usual first step is to ask your current lender for a rate review; if it won't match, run the break-even sum above. This is general information, not advice.
Internal vs external refinancing
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).
What documents do I need to refinance?
Much the same as for your first loan, plus details of the loan you're leaving. NAB, for example, asks for your income, expenses and current home loan details, and may ask for identification such as your passport and driver licence.
- Identification, such as a passport and driver licence
- Evidence of income: recent payslips, or tax returns and notices of assessment if you're self-employed
- Statements for your current home loan, showing the balance and your repayment history
- Details of your other debts and your living expenses
- A discharge or refinance authority for your current lender, which tells it to release the mortgage when the new loan settles
What happens to my offset and redraw?
Your old loan is paid out and closed at settlement, and anything attached to it closes or stops working with it. Money in redraw is extra repayments you have already made, so it has reduced the balance being paid out; if you want that cash, redraw it before you refinance, which raises the amount you need to borrow.
An offset account is a separate account, so its money stays yours, but it stops offsetting once the old loan closes. Set up an offset with the new loan, and check it is linked: Moneysmart warns that refinancing or switching products can break the link between an offset account and a mortgage, and that you may need to ask the bank to re-link it.
Can I refinance with less than 20% equity?
Usually, yes, but you will probably pay lenders mortgage insurance again. LMI generally isn't transferred between lenders, and Moneysmart says the cost can outweigh the savings from a lower rate. Ask your current lender whether part of your original premium can be refunded. Lenders also cap the LVR they'll refinance at: Unloan's maximum is 90%, for example.
If you bought through the 5% Deposit Scheme, Housing Australia says you can refinance to another participating lender and keep the guarantee, as long as you don't increase the loan or extend its term. Moving to a lender outside the scheme ends the guarantee. See low deposit home loans for how LMI works.
How to judge a refinance cashback
Treat a cashback as a one-off discount and set it against what a higher rate would cost you. As an illustration, each 0.10 percentage points of interest on a $500,000 loan costs about $500 a year, so a $3,000 cashback on a loan priced 0.10 points higher is used up in about six years, and on one priced 0.25 points higher (about $1,250 a year) in under three.
- Compare comparison rates and fees first, then the cashback
- Check the offer's conditions, such as the minimum loan amount and which loans qualify
- Subtract your switching costs (discharge, government fees, and any LMI or break costs)
- Ask your current lender to match the rate before you move for a cashback
How to refinance, step by step
Most refinances take a few weeks from application to settlement.
- Get your current loan's balance, rate, remaining term and any fixed-rate break cost
- Compare the key facts sheets of two or more loans for your loan amount, including the comparison rate
- Ask your current lender to match the best offer
- Apply with the new lender and sign a discharge authority for your old lender
- After settlement, check that any offset account is linked to the new loan and set up your repayments
General information only. It doesn't take into account your objectives, financial situation or needs. Check the lender's key facts sheet, credit guide and TMD before you apply. We don't compare every lender, and we may earn a commission if you apply through our links.
What to watch for
- Break costs on a fixed loan. Ask your lender for a written quote before you apply elsewhere.
- Resetting the loan to 30 years. Lower repayments can hide a higher total cost.
- A new LMI premium if your LVR is above about 80%. Moneysmart suggests asking your current lender whether any of your original LMI can be refunded.
- Cashback offers that are smaller than the extra interest from a higher rate.
- Offset accounts that aren't relinked after the switch. ASIC has found cases where unlinked offsets cost borrowers interest.
Common questions
Is it worth it to refinance my house right now?
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; our refinance calculator does the sum. Ask your current lender for a better rate first.
Which bank is offering the lowest mortgage rates in Australia?
None is cheapest for everyone: rates depend on your LVR, loan size, purpose and repayment type, and change weekly. New owner-occupier variable loans averaged 6.23% in August 2026 (RBA). Compare comparison rates on each lender's key facts sheet for your loan amount.
Is Unloan a good loan lender?
Unloan is a digital home lender that charges no application, ongoing or exit fees and is a fully owned division of Commonwealth Bank. Whether it suits you depends on its limits (no construction loans, no offset account, a 90% maximum LVR). See our Unloan review.
Is Unloan owned by CommBank?
Yes. Unloan is a division of the Commonwealth Bank of Australia, which also owns Bankwest. Moving between CommBank brands is still a refinance. See our Unloan review.
How much does it cost to refinance a $300,000 loan?
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.
What is the 2% rule for refinancing?
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.
What disqualifies you from refinancing?
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 is the best time to 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.
How long does refinancing take?
Typically a few weeks, depending on the valuation, how quickly you provide documents and how long your current lender takes to process the discharge.
What documents do I need to refinance?
Identification, evidence of income (payslips, or tax returns if you're self-employed), statements for your current home loan, and details of your other debts and expenses. NAB, for example, asks for your income, expenses and current home loan details, and may ask for your passport and driver licence.
Can I refinance with less than 20% equity?
Usually, but expect to pay lenders mortgage insurance again, because LMI generally isn't transferred between lenders. Moneysmart suggests asking your current lender whether part of your original premium can be refunded.
What happens to my offset account when I refinance?
It stops offsetting when your old loan is paid out. Open or link an offset with the new loan, then check your statements show the interest saving: Moneysmart warns refinancing can break the link.
Is a refinance cashback worth it?
Only if it is bigger than the extra interest a higher rate would cost you over the time you'll keep the loan. Each 0.10 percentage points on a $500,000 loan is about $500 a year.
About rates on this page
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.