How Do I Know Whether It’s Actually Worth Refinancing My Home Loan Right Now?
A 0.5% rate reduction sounds compelling. Whether it actually is depends on how much you owe, how many years remain, and what it costs to switch. Those three numbers together tell the story.
The answer sits in a comparison that most people never do properly: the total cost of your current loan over the remaining term, versus the total cost of a refinanced loan after fees and the time it takes to break even on switching costs.
The Refinance Break-Even Calculation
Take your switching costs and calculate how many months of interest savings are needed to recover them. If break-even is 6 months, refinancing is clearly worth it. If it’s 36 months and you’re planning to sell in 2 years, it isn’t.
Switching Costs to Factor In
- Discharge fee from current lender: $150–$400
- New loan application or settlement fee: $0–$600 depending on lender
- Valuation fee: $0–$300 (often waived)
- Break costs if on fixed rate: potentially significant
- Government mortgage registration fees: varies by state
When Refinancing Is Clearly Worth Considering
- Your current rate is 0.5% or more above what’s available for comparable loans
- Your property has grown in value and a lower LVR now qualifies you for better pricing
- Your fixed rate is expiring and the revert rate is materially higher than the market
- You want to access equity and your current lender isn’t the most efficient path to do so
You may wish to speak with a licensed mortgage broker to assess your personal circumstances.
This is general information only. Refinancing decisions depend on individual circumstances. Speak with a licensed mortgage broker before taking any action. All loans are subject to lender approval.
Sources: ASIC MoneySmart, Refinancing Your Home Loan 2025; RBA, Housing Finance Data 2025; MFAA Industry Intelligence Service Report 2025.
