Checked 28 September 2026. General information only; no interest rates are quoted in this article.
The short answer: Refinancing usually involves a few one-off costs to leave your current loan (a discharge fee, government fees to remove the old mortgage and, if you’re on a fixed rate, possibly a break cost) and a few to set up the new one (application or establishment, valuation, settlement and government registration fees). If you have less than 20% equity, Lenders Mortgage Insurance (LMI) can add a large cost. Some lenders waive some of these fees and some don’t. What matters is whether the benefit of switching outweighs the total cost over the time you’ll actually keep the loan. Moneysmart puts it simply: “Before you switch, make sure the benefits outweigh the costs.”
The costs of leaving your current loan
Discharge (or termination) fee. Moneysmart describes this as “a fee when you close your current loan”. Your current lender sets it. Ask for the figure in writing.
Break costs on a fixed rate. If you leave during a fixed-rate period, you may have to pay a break fee. Moneysmart warns that “the break fee may be very high. Generally, the more interest rates have come down since you took on the fixed rate loan, the higher the break fee will be.” Break costs change daily, so ask your lender for a written estimate for a specific date. Waiting until the fixed period ends can sometimes be the cheaper option.
Government fee to discharge the mortgage. The state land registry charges a fee to register the removal of your old mortgage. In NSW it’s set by NSW Land Registry Services and updated each 1 July. Check the current fee schedule, or ask your conveyancer or lender.
The costs of setting up the new loan
Application or establishment fee. Moneysmart describes this as an “upfront fee when you apply for a new loan”. Some lenders charge it and some waive it.
Valuation and settlement fees. The new lender values the property and may charge for valuation, settlement or document preparation. These vary between lenders.
Government fee to register the new mortgage. This is a separate land registry fee from the discharge.
Lenders Mortgage Insurance, if your equity is under 20%. Moneysmart: “If you have less than 20% equity in your home, you might have to pay lender’s mortgage insurance (LMI). This can increase the cost of switching and outweigh the savings you’ll get from a lower interest rate.” LMI you paid on your original loan doesn’t carry over to a new lender. Moneysmart suggests asking your current lender about a partial refund.
Stamp duty, in some cases. Moneysmart notes you “may be liable for stamp duty when you refinance” and suggests checking with your lender.
Ongoing fees on the new loan. Annual package fees and monthly account-keeping fees recur every year, so include them when you compare. A loan with no upfront fees but a yearly package fee can cost more over time than one with a one-off application fee.
The cost people miss: resetting the loan term
If you have 22 years left on your loan and refinance to a new 30-year term, your repayments may fall mainly because you’ve added eight years of payments. Moneysmart: “The longer you have a loan, the more you’ll pay in interest. If you do decide to switch, negotiate a loan with a similar length to your current one.”
When you compare, compare like with like: the same remaining term, the same loan amount and the same repayment type.
What about refinance cashback offers?
Some lenders offer cashback to people who refinance. Treat it as one line in the comparison, not the reason to switch. Check the conditions (minimum loan size, time limits, which products qualify), and compare the total cost of each loan over the period you expect to keep it, with the cashback included.
How to work out whether switching is worth it
A simple way to test it is a break-even calculation:
Total one-off cost of switching ÷ the monthly reduction in your total loan costs = months to break even
Hypothetical example, not a client and not a current offer: if switching costs $2,000 in total, and the new loan’s repayments and fees together come to $100 a month less on the same remaining term, it takes about 20 months to recover the cost. If you’re likely to sell or refinance again before then, switching probably won’t pay off.
Moneysmart’s mortgage switching calculator does this for you and “shows how long it will take to recover the cost of switching”.
Ask your current lender first
Moneysmart’s first tip is to tell your current lender you’re planning to switch, because “to keep your business, your lender may reduce the interest rate on your current loan.” Some lenders charge a switching fee to move you to a different loan internally, but you may avoid discharge, application and government fees. The trade-off is that you’re only comparing one lender’s offer.
When refinancing usually doesn’t stack up
- You’re likely to sell within a year or two, before you’d recover the costs.
- You’re partway through a fixed term with a significant break cost.
- Your equity is under 20% and switching would mean paying LMI again.
- The only “benefit” comes from stretching the loan term.
- Your circumstances have changed and you might not pass the new lender’s assessment. A declined application is recorded on your credit report, so check how lenders assess your situation before you apply. We explain the common reasons in What disqualifies you from refinancing (on our site).
If you’re finding repayments hard right now, talk to your lender about hardship options before you look at refinancing. See also our financial hardship page.
What we look at in a Home Loan Health Check
A Home Loan Health Check is a no-obligation review of the loan you already have. We look at:
- your current rate, fees and loan type, from your latest statement
- the features you’re paying for, such as an offset, redraw or package, and whether you use them
- when any fixed period ends, and the likely break cost
- your approximate equity, and whether LMI would apply on a new loan
- what your current lender might offer if you ask
- options across our panel of 30+ lenders, compared on total cost over the same remaining term
- the full list of switching costs, set against any benefit.
Sometimes the honest answer is “stay where you are”, or “ask your lender for a better deal first”. We’ll tell you that too. We’re required by law to act in your best interests.
For most home loans you won’t pay us a fee; we’re paid by the lender. Any fee is disclosed in writing first (see our Credit Guide).
Book a no-obligation Home Loan Health Check, or call 02 8708 7240.
Frequently asked questions
How much does it cost to refinance a home loan in Australia?
It depends on your current lender, your new lender, your state and whether you’re on a fixed rate. The usual items are a discharge fee, government fees to discharge the old mortgage and register the new one, the new lender’s application, valuation and settlement fees, and possibly break costs and LMI. Ask each lender for a written list, because some fees are waived.
Can I refinance with my current bank?
Often, yes. Moneysmart lists a “switching fee” for refinancing internally. It can avoid some costs, but it means comparing only one lender’s options.
Will I have to pay LMI again?
If you’re borrowing more than 80% of the property’s value with the new lender, you may have to. LMI doesn’t transfer between lenders.
Does applying to refinance affect my credit report?
Yes. Credit applications are recorded on your credit report, and several applications in a short time can concern lenders. That’s why it pays to check fit before you apply.
Does a Home Loan Health Check cost anything?
It’s no-obligation. For most home loans you won’t pay us a fee; we’re paid by the lender. Any fee is disclosed in writing first, as set out in our Credit Guide.
Sources
- ASIC Moneysmart, Switching home loans (updated 29 Jul 2026)
- ASIC Moneysmart, Mortgage switching calculator
- ASIC Moneysmart, Credit scores and credit reports
- ASIC Moneysmart, Using a mortgage broker (updated 4 Sep 2026)
- NSW Land Registry Services, fees (2026–27 schedule)
Written by the Click Financial team, licensed mortgage and finance brokers (A & M Group Pty Ltd, Australian Credit Licence 390820, MFAA member 320936). General information only, not credit advice. It doesn’t consider your objectives, financial situation or needs. Lending criteria, fees and charges apply. Read our Credit Guide.
