Refinancing Guide Australia | When & How to Switch Loans

By AusTaxTools Editorial Team ·

Short answer

Refinancing replaces your current loan with a new one — usually for a lower rate, better features, or both. The decision is straightforward when the annual saving clearly exceeds the one-off switching costs. It gets harder when break costs, LMI, or lost features cloud the picture.

The savings test

Calculate the annual interest saving on your remaining balance. Then subtract all switching costs. If the payback period is under 12–18 months, refinancing is usually worth it.

Break cost risk

Fixed rate borrowers face break costs based on rate differentials and remaining term. On a large balance with years left, these can run into five figures. Always get a quote before committing.

Feature trade-offs

A lower rate means nothing if you lose offset access, redraw flexibility, or repayment portability you were actually using. Compare the full product, not just the headline number.

Common mistakes

  • Refinancing for a 0.1% saving on a small balance — the switching costs eat the benefit.
  • Forgetting to include discharge, settlement, and valuation fees in the comparison.
  • Extending the loan term on refinance and paying more total interest despite a lower rate.
  • Refinancing away from a product with features you rely on — like offset or split loan flexibility.

Refinance calculator

Compare your current loan against a new offer including all switching costs.

Rate stress scenarios

Check whether the new rate holds up under stress before switching.

Quote comparison

Score multiple refinance offers using weighted criteria beyond rate alone.

Understand switching fees

Discharge, break, and settlement costs explained in context.

Fixed vs variable on refinance

Decide whether to lock or float when setting up your new loan.

Switch with confidence

Refinancing pays off when the numbers are clear — not when marketing says so.

Model the real saving after all costs before you start the application process.

Open refinance calculator

Related Guides

First Home Buyer Guide

Government grants, stamp duty concessions, and the costs most first buyers miss.

Buying Costs Beyond the Deposit

Stamp duty, LMI, conveyancing, and the hidden costs most buyers miss.

Borrowing Power

How lenders calculate what you can borrow — income, expenses, and buffers.

Frequently Asked Questions

When is the right time to refinance in Australia?
Refinancing makes sense when the interest saving exceeds the switching costs — including discharge fees, new application fees, and any break costs on a fixed rate. A common rule of thumb is a saving of at least 0.5% on a large balance.
What costs are involved in refinancing?
Discharge fee from your current lender, application or settlement fees with the new lender, possible valuation costs, and break costs if you are on a fixed rate. These can total $1,000 to $5,000 or more.
Can I refinance if I have less than 20% equity?
Yes, but you may need to pay Lenders Mortgage Insurance again on the new loan. This can significantly reduce or eliminate the net benefit of switching.