When is refinancing worth it?

Refinancing hit record levels in 2026 as rate rises pushed borrowers to look for better deals. It can save thousands, but only if you avoid a few traps. Check your own break-even point with the refinance calculator.

What refinancing can save

Rate cut	Monthly saving	Break-even on $1,000 costs	Interest saved
0.25 points	$94	11 months	$27,268
0.50 points	$187	6 months	$55,236
0.65 points (6.75% to 6.10%)	$243	5 months	$71,870
1.00 point	$371	3 months	$110,249

When refinancing is worth it

• The new rate is at least 0.25 points lower and the costs are recovered within about a year.
• Your LVR is under 80%, so you won’t pay LMI again.
• You are on a variable rate, or your fixed period is ending, so there are no big break costs.
• You have a reasonable balance and plenty of years left, so small rate differences add up.
• You want features your current loan lacks, such as an offset account.

When it may not be worth it

• Your LVR is above 80%. LMI does not transfer between lenders, so you may pay a new premium. See what LMI costs.
• You are mid-way through a fixed rate. Break costs can outweigh the saving. Ask your lender for a quote.
• Your balance is small or the loan is nearly paid off. The saving may not justify the costs and effort.
• Your income or credit has changed. You need to pass a new assessment at the new rate plus the 3% buffer.
• Your current lender will match the rate. Then you save without switching. Here’s how to ask your bank for a lower rate.

The costs of switching

Cost	Typical amount
Discharge fee (old lender)	A few hundred dollars
Government registration fees	Discharge plus new mortgage registration, varies by state
Application, valuation, settlement fees	Often waived by the new lender
Break costs (fixed loans)	Can be thousands of dollars
LMI (if LVR above 80%)	Can be thousands of dollars

Cashback offers can cover these costs, but don’t let a cashback distract from the rate. A rate just 0.20 points higher costs a $600,000 borrower about $1,200 a year.

Don’t reset to 30 years

The biggest refinancing trap is extending your loan term. Refinancing to 6.10% over a fresh 30 years drops the repayment on $600,000 to $3,636, which looks like a $510 monthly saving. But you’d pay about $65,300 more interest in total than staying on 6.75% for the remaining 25 years. Keep the same remaining term, or keep paying your old repayment.

Fixed or variable when you switch?

Variable rates are currently cheaper than fixed at most lenders. See fixed or variable in 2026 before choosing, compare current offers on homeloaninterestrates.au, and run the numbers in the refinance calculator.

Frequently asked questions