How Much Does It Cost to Refinance in Australia?

Key Takeaways

Refinancing a home loan in Australia typically costs $500–$2,000, depending on lender, loan type, and state.
Main costs include application, valuation, legal, settlement, exit (discharge), government, and potential mortgage insurance fees.
Hidden and variable costs can reduce your savings—always run the numbers beyond the headline interest rate.
The break-even point: calculate how long savings will take to offset refinancing costs before switching.
Personalised advice makes all the difference. Book a mortgage review call today.

Refinancing Costs in Australia: What You Need to Know

If you’re considering whether it’s worth refinancing your home loan in Australia, you’re not alone. It’s tempting: lower interest rates, smaller repayments, and access to equity for renovations or investments. But the question nearly every savvy homeowner wants answered is, “How much does it cost to refinance in Australia?”

The answer, for most people, is more than you might think—but less than the wrong mortgage for the next few decades. The average cost to refinance a home loan usually falls in the $500–$2,000 range, but what’s really at stake is understanding the blend of both the visible and the hidden costs before you make the decision to switch.

The Complete Breakdown: Refinancing Fees and Charges

Standard Upfront Refinancing Costs

Before you sign a loan offer, there are several upfront costs lenders will clearly outline in their product disclosure statements:

Cost Type	Typical Range	Who Charges It?	Can It Be Negotiated?
Application Fee	$0 – $750	New lender	Yes, often waived
Property Valuation Fee	$50 – $600	New lender	Sometimes
Settlement Fee	$100 – $400	New lender	Rarely
Exit/Discharge Fee	$350 – $500	Old lender	No
Government Registration Fees	$130 – $250 per title	State government	No
Title Search Fee	$50 – $100	Lender/Legal team	No
Legal and Admin Fees	$200 – $400+	Lender/Solicitor	Sometimes
Lender’s Mortgage Insurance (LMI)	$2,000+ (if LVR > 80%)	New lender	No

Source: Money.com.au, Bank Australia, Canstar

Hidden and Variable Refinancing Costs

Beware the fine print: lenders compete aggressively on rates—less so on transparency about all costs involved.

Break Fees: If refinancing from a fixed loan, you may face substantial penalties, especially if market rates have dropped since you locked in. This can run into thousands of dollars.
Ongoing Account Fees: Monthly or annual maintenance fees are easy to overlook but add up over the life of your loan.
Cashback Offer Conditions: Great marketing, but cashback offers sometimes signal higher ongoing rates or fees down the track.
Lenders Mortgage Insurance (LMI) is a significant potential expense. If your loan is more than 80% of your property value, you may have to pay LMI again, even if you already paid it on your current loan.

Why People Hesitate to Refinance (And Why It Matters)

Let’s address the real concerns holding most people back from refinancing: fear of unexpected costs and uncertainty about whether the savings will be worth it.

Our research consistently shows three main barriers:

Most Australians worry about “hidden costs and surprise fees”—often the legacy of feeling burned by small print in the past.
Many hesitate because calculating the financial benefit can feel overwhelming, especially with variables like loan-to-value ratio (LVR), state-based fees, and break charges.
The biggest concern is straightforward: “Even if I refinance to a new low rate, will the cost to switch eat up all my savings?”

This anxiety is well-founded. According to recent case studies, an average homeowner refinancing a $600,000 loan might pay $1,000 in switch fees but can save $189 per month if the rate drops by just 0.5%—breaking even in five months. But not everyone receives this outcome without careful planning.

How to Calculate Whether Refinancing Is Worth the Cost

Let’s bring clarity to the refinancing decision with a step-by-step approach:

1. Add Up All Refinancing Costs

Calculate the full expense of switching by adding application, valuation, settlement, discharge, government, title search, legal fees, and possible LMI (if your LVR is above 80%). Don’t forget potential break fees for fixed-rate loans.

Example Refinancing Cost Calculation

Refinancing Fee	Example Cost
Application Fee	$500
Property Valuation Fee	$400
Settlement Fee	$200
Discharge Fee (old lender)	$350
Registration (per title)	$200
Title Search Fee	$80
Legal/Admin	$250
Total Upfront Costs	$1,980

If your loan-to-value ratio exceeds 80%, you’ll need to add LMI costs, which can range from $2,000 for smaller loans to $10,000+ for high-value properties.

2. Calculate Your Monthly Savings

Determine how much you’ll save in monthly repayments with the new interest rate. For a $600,000 loan with a 27-year remaining term:

Current Rate	New Rate	Monthly Repayment Difference
6.49%	5.99%	$189 savings per month

Find Your Break-Even Point

Divide your total refinancing costs by your monthly savings to determine when you’ll break even:

$1,980 (total costs) ÷ $189 (monthly savings) = 10.5 months

In this example, you’ll recover your refinancing costs in approximately 11 months. If you plan to keep the property longer than this, refinancing makes financial sense.

4. Factor in Additional Benefits

Consider other advantages beyond interest rate savings, such as:

Access to new features (offset accounts, redraw facilities)
Improved loan structure for investment purposes
Access to equity for renovations or other investments
Consolidation of multiple debts

Real-World Refinancing Scenarios: Success and Warning Stories

Scenario 1: The Smart Switch

Emma refinanced her $500,000 loan from 6.49% to 5.99%. Upfront fees totaled $1,200, but her new repayments save her $175/month. She broke even after only 7 months and will pocket more than $6,000 in savings over five years—net of all costs.

Scenario 2: The Hidden Fee Trap

Sam chased a headline “low rate” only to discover $900 in annual account and offset fees—eliminating much of his interest rate savings over a 3-year period. Always request a total cost of loan comparison that includes all ongoing fees, not just the interest rate.

Scenario 3: The Fixed Rate Penalty

Jess attempted to exit her current fixed-rate loan early. The break cost? $4,800—substantially more than her potential interest savings, making refinancing unviable until her fixed term ends.

Smart Refinancing Strategies to Maximise Savings

Negotiate Fee Waivers

Many lenders are willing to waive or reduce upfront fees to win your business, especially if:

You have a large loan amount (usually over $500,000)
You have a strong credit history and stable income
You’re a low-risk borrower with substantial equity

Time Your Refinance Strategically

If you have a fixed-rate loan, wait until your fixed period ends to avoid break fees. If interest rates are falling, consider whether waiting might secure you an even better deal.

Consider Cashback Offers Carefully

Many lenders offer cashback incentives ($2,000-$4,000) for refinancing. These can effectively offset your switching costs, but always check that the ongoing interest rate remains competitive long-term.

Use a Mortgage Broker to Compare Options

A good mortgage broker will:

Disclose all potential costs upfront
Calculate your specific break-even point
Model savings with current and likely future rates
Negotiate fee waivers with lenders on your behalf

When Refinancing Makes Financial Sense

Refinancing is typically worth considering when:

Your rate difference is significant – At least 0.5% lower than your current rate
You plan to keep the loan long-term – At least 2-3 years to recover costs
Your property has increased in value – Potentially lowering your LVR and helping you avoid LMI
You need to restructure your loan – Converting from interest-only to principal and interest, or vice versa
You want to access equity – For investments, renovations or other financial goals

Conclusion: Making an Informed Refinancing Decision

Refinancing is a powerful tool for home loan holders who want to take control of their financial future—but only if you get crystal clear about all the costs upfront. Most importantly, don’t get seduced by a headline rate—dig into every fee, demand transparency, and model your break-even carefully.

Above all, get expert guidance tailored to your situation. You deserve to refinance with the confidence that you’re building wealth—not just giving it to the bank in sneaky fees.

Ready to Make Refinancing Work for You?

Book a mortgage review call today – get an exact cost breakdown, bespoke savings analysis, and peace of mind that you’re not leaving money on the table.

Frequently Asked Questions

Is it still worth refinancing with the current interest rates?

Yes, if your new repayments plus fees result in a lower total cost within your planned timeframe. Calculate your break-even point first—ideally within 2 years—to determine if refinancing makes financial sense for your situation.

What happens if my property value has decreased since I bought it?

If your property value has fallen, your loan-to-value ratio (LVR) will increase, potentially requiring you to pay Lender’s Mortgage Insurance again. In some cases, this could make refinancing financially unviable until property values recover or you pay down more of your loan.

Can I negotiate refinancing fees with lenders?

Absolutely. Always ask which fees they’re willing to waive or reduce. Application fees, valuation fees, and even some legal fees are often negotiable, especially if you have a strong credit profile or are borrowing a significant amount.

Will refinancing affect my credit score?

Yes, but usually only temporarily. Each loan application places an inquiry on your credit file, which can slightly lower your score. However, making regular repayments on your new loan will help rebuild your score over time.