What will it cost to refinance?
The cost of refinancing depends on your outgoing loan, the new product and the transaction. Build a worksheet with separate columns for one-off switching costs, recurring fees and amounts still awaiting a quote. Fixed-rate break costs and possible LMI need particular attention. Compare the total with interest savings over your expected holding period, and separately check how much cash must be available before any rebate arrives.
By Ratey · General information for Australian borrowers.
Example: keep the recurring fee visible
For illustration, assume $350 discharge costs, $650 setup and settlement costs, and $400 of other confirmed transaction charges. Upfront costs total $1,400. A $300 annual fee adds $900 across three years, giving $2,300 of switching and product fees before interest. These invented amounts demonstrate the worksheet, not a typical Australian price.
If the current loan also charges $300 annually, that $900 exists in both scenarios and cancels in the difference. If it charges nothing, the new fee reduces the refinance benefit. Adding the fee to only one side without checking the other can reverse your conclusion.
Put every charge in the right column
A useful worksheet records the charge, who collects it, when it is payable and the evidence for the amount. This makes it easier to catch a settlement charge already included in another estimate. Keep a quote date beside variable amounts and ask which figures could change before settlement.
Moneysmart identifies discharge, application, switching and possible fixed-rate break fees among the costs to check. Your transaction may also have registration, settlement or other charges. Ask for an itemised estimate rather than adopting a generic online total.
| Cost category | What to request |
|---|---|
| Existing loan closure | Payout figure and itemised discharge charges |
| Fixed portion | Break-cost quote and its effective date |
| New loan setup | Application, valuation and settlement fee list |
| LMI if applicable | Premium and whether paid upfront or borrowed |
| Ongoing product cost | Annual, monthly and required account charges |
A cost total and a cash requirement are different
If the lender adds a charge to your loan, it still costs money and may attract interest. Write it in a borrowed-cost column so it is not counted again as cash paid upfront. Ask for the starting balance of the new loan with every financed charge included.
Likewise, an expected cashback is not necessarily money available on settlement day. Build a simple timeline: money required before settlement, money required at settlement, and confirmed credits afterwards. Keep household funds available for the gap instead of assuming the promotion funds the transaction immediately.
Our refinance calculator models fees paid upfront. Use it for that scenario; obtain a larger-balance repayment schedule if you intend to borrow the costs. Its result should not be used unchanged for a financed-fee arrangement.
Resolve the costs that can change the decision
Treat a blank break-cost or LMI field as a reason to pause the final comparison. These amounts can materially change the outcome. Ask the lender to explain what triggers a recalculation and when you can obtain the final figure.
For each unknown, run a provisional scenario with a higher cost. This is a sensitivity check, not a prediction. If a small change removes the benefit, you have learned that the written quote matters more than a few dollars of monthly repayment difference.
- Confirm whether a waived fee has conditions or a deadline.
- Ask which charges still apply if the application does not proceed.
- Check whether the quoted payout already includes a discharge fee.
- Record whether a package fee is annual or monthly.
Compare the cost with a realistic stay
Choose a holding period that matches your plans. A household likely to sell next year has a different decision from one expecting to retain the loan for five years. Calculate interest and fees over that period, then compare the debt remaining.
Also request a written pricing review from your current lender. Put a genuine retention offer into the same worksheet, including any product-change costs. This gives you another concrete option to compare with switching. The guide to rate comparison explains how to match loan features.
Your next-step checklist
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Common questions
Are there standard refinancing costs?
There is no single total that fits every borrower. Product fees, fixed-rate exposure, the security and the transaction all affect the worksheet.
Should I subtract cashback from the fees?
Show it as a separate conditional credit, then calculate the net amount. Keep payment timing visible and also test the comparison without it.
Does a lower interest rate guarantee the fees are worth paying?
No. The rate difference, balance and holding period determine the interest benefit. Compare that benefit with all the incremental costs.
Sources and assumptions
These primary sources support the explanations above. Examples use invented figures to show the calculation or decision; they are not available loan offers. Check your lender’s terms for your circumstances.
Calculations are estimates and do not establish borrowing eligibility. Read the calculation methodology.
Check when costs are recovered
Enter your confirmed upfront costs and compare the interest and fees over your intended holding period.