Refinancing Guide Australia | When & How to Switch Loans
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