Refinancing gets sold on the saving and quietly skips the cost. So here is the cost, in full, before anyone talks you into anything.
Most home loan refinances in Australia cost between $500 and $2,000 all in. That is small next to the saving on a decent rate reduction, but it is not zero, and it is the number that decides whether a marginal switch is worth making.
Every fee, and who charges it
Discharge fee: $150 to $500
Charged by your current lender for closing the loan and releasing the mortgage. Sometimes called a termination or settlement fee.
This one is set out in your original loan contract, so check there rather than guessing. It rarely gets waived, because the lender charging it is the one losing your business.
Government mortgage registration: $150 to $350
A state government charge for registering the new mortgage and discharging the old one on the title. It varies by state and it cannot be waived by anybody, because it is not the lender's fee to waive.
Loan establishment or application fee: $0 to $600
Charged by the incoming lender for setting up the new loan. This is the fee most likely to be waived, particularly on a competitive refinance. A lot of lenders run permanent $0 establishment offers on refinances.
Worth asking directly. It is frequently discretionary.
Property valuation: $0 to $600
The new lender needs to know what your property is worth. Many order an automated valuation, which costs them very little and is often free to you. A full valuation with a valuer physically attending costs more and is more likely to be passed on, particularly for unusual properties or higher loan amounts.
Ongoing or annual package fee: $0 to $400 a year
Not a switching cost, but it belongs in your comparison. A loan with a sharp rate and a $395 annual package fee can be worse than a slightly higher rate with no fee, depending on your loan size. On smaller loans, package fees bite harder.
The two big ones that are not on that list
Fixed rate break costs
If you are breaking a fixed loan early, this is the number that matters and everything above is noise.
Break costs depend on how wholesale funding rates have moved since you fixed and how much of your fixed term remains. They can be a few hundred dollars. They can be five figures. There is no reliable way to estimate one from outside the lender's system.
Ring your lender and ask for the break cost in writing. Do not accept a verbal indication, and do not start an application before you have it.
Lenders mortgage insurance, again
LMI is not transferable between lenders. If your new loan is above 80% LVR, you may pay it a second time even though you already paid it once.
This is the single most common way a refinance turns out to be a bad idea. If you are sitting at 82% LVR, the sensible move is often to wait, or pay the balance down under 80% first, rather than switch and hand over another five figure premium.
If you are not sure where your LVR sits, the property may have moved since you last checked. A current valuation can put you under 80% without you doing anything.
The break-even calculation
Total your switching costs. Work out your monthly saving. Divide the first by the second.
Worked example. You are on 6.40% with $520,000 remaining over 24 years. A new lender offers 5.75%.
- Monthly saving: roughly $205
- Discharge fee: $350
- Registration: $250
- Establishment: waived
- Valuation: waived
- Total cost: $600
- Break-even: under three months
After that it is $205 a month, every month, for as long as the rate gap holds. Over five years that is more than $12,000.
A worse example. Same loan, but the new rate is only 6.25%.
- Monthly saving: roughly $47
- Total cost: $600
- Break-even: about 13 months
That is not obviously wrong, but it is thin. A 0.15% gap can close on its own if your current lender adjusts, and you have spent a month of admin for a saving you might have got by phoning and asking.
The rough rule
- Break-even under 12 months: generally worth doing
- 12 to 24 months: worth doing only if the rate gap is stable and you are staying put
- Over 24 months: usually not, unless you are refinancing for a reason other than rate, such as releasing equity or consolidating debt
Ask your current lender first
This costs nothing and takes ten minutes.
Ring the retention team. Tell them you are reviewing your loan and have been quoted a better rate elsewhere. Quote an actual number, because a vague complaint gets a vague answer.
If they match or come close, you have saved yourself the entire switching cost and several weeks of paperwork. If they will not move, you now have a real comparison and a clear reason to go.
Lenders discount for retention because losing a loan costs them far more than a rate reduction does. Plenty of people never ask.
What the costs do not include
Your time. A refinance means gathering payslips, bank statements, identification and details of every debt you hold. Expect a few hours across a few weeks.
Worth mentioning because it is a real cost, and for a $47 a month saving it may be the deciding factor.
Before you apply anywhere
Every application leaves a hard enquiry on your credit file. Applying to three lenders to compare offers makes you look like a borrower who has been shopping and failing, and that reads as risk to whoever looks next.
Find out which lenders will approve you before anyone pulls your file. Your Kreddi Score shows where you stand and which lenders you qualify for today, with no credit impact.
Then run your numbers on the refinance calculator, and if the gap is real, apply once.
Frequently Asked Questions
How much does it cost to refinance a home loan in Australia? Most refinances cost between $500 and $2,000. That covers a discharge fee of $150 to $500, government mortgage registration of $150 to $350, and sometimes an establishment fee and valuation, both of which are frequently waived. Fixed rate break costs are separate and can be much larger.
Can refinancing fees be waived? Some can. Establishment fees and valuation fees are the two most commonly waived, particularly when a lender is competing for your business. Government registration charges cannot be waived because they are state fees. Discharge fees are set by your outgoing lender and rarely move.
How long before refinancing pays for itself? Divide your total switching cost by your monthly saving. Saving $300 a month on $1,200 of costs means you break even in four months. Under twelve months is generally worth doing. Beyond about two years, look carefully at whether the saving is real.
Do I need a solicitor to refinance? Usually not. Most lenders handle the discharge and registration through their own legal team as part of the process. Independent legal advice is more likely to be needed for complex structures, trusts, or when you are removing someone from the loan.
Is LMI payable again when I refinance? Only if your new loan is above 80% LVR. LMI is not transferable between lenders, so refinancing at a high LVR can mean paying it a second time. If you are close to 80%, it is worth waiting or paying the balance down before switching.
Work Out Whether the Switch Pays for Itself
The costs above are typical ranges, not quotes. What matters is your break-even, and that depends on your balance, your current rate and what you can actually be approved for.
Run your figures through the refinance calculator, then use your Kreddi Score to see which of the 130+ lenders on our panel would approve you before you apply anywhere. Both are free, and the score leaves no mark on your credit file.
This is general information, not personal advice. Fees and charges vary by lender and by state, and the figures here are typical ranges rather than quotes. Confirm actual costs with your lender or broker before deciding. NIK Finance Pty Ltd is a Credit Representative (567387) of Finsure Finance & Insurance Pty Ltd, Australian Credit Licence 384704.