Refinancing: what to check before you switch

Compare the whole loan, not just the rate

A lower interest rate can reduce repayments, but refinancing only makes sense when the wider numbers and the loan features work for you. Start with your current balance, interest rate, repayment type, remaining term and any offset balance. Use the same balance and remaining term when comparing alternatives.

Add up the cost of moving

Ask for a clear estimate of discharge, application, valuation, registration and ongoing fees. If your rate is fixed, request a current break-cost quote before making a decision. Lenders mortgage insurance may also be relevant, depending on equity and lender requirements. A cashback offer should never replace a full cost comparison.

A simple break-even example

Imagine switching costs of $2,000 and an estimated repayment reduction of $150 a month. Dividing $2,000 by $150 gives a simple break-even point of about 13.3 months. This is an illustration only: it assumes the saving stays the same and excludes changes in fees, rate movements and the effect of how switching costs are paid.

Watch the remaining term

If you have 23 years left, a new 30-year term can make repayments look more attractive while increasing total interest over time. Compare a similar remaining term first. Then consider whether flexibility, an offset account or the ability to make extra repayments matters more to your situation.

Ask your existing lender too

A pricing request with your current lender may be worth exploring alongside other options. Staying could avoid some switching costs, while another lender may offer a structure that better suits your needs. There is no one answer for every borrower.

Frequently asked questions

Will refinancing affect my credit report?

A formal application may involve a credit enquiry. Before making multiple applications, talk through the process, the lender’s requirements and your circumstances with your broker.

Can I refinance while on a fixed rate?

It may be possible, but break costs can be material and change over time. Get a current payout or break-cost estimate and compare it with the potential benefit before proceeding.

Your next step

Use the refinance calculator as a starting point, then speak with Blake for a review of your actual loan, costs and eligibility. The calculator is not a lender quote or a recommendation. All lending remains subject to assessment and approval.

Further reading

ASIC Moneysmart: switching home loans