Short answer
Refinancing can make sense if you can get a better rate or features after counting every switching cost. Start by comparing your loan with what's on offer, then ask your current lender for a better deal, because they may cut your rate to keep you. Add up discharge, break and application fees, and lenders mortgage insurance if your equity is under 20%.
The checklist
- Know your current loan. Your interest rate, the comparison rate, the balance owing, the years left, and whether it's fixed or variable.
- Check your equity. Your home's value minus what you owe. With less than 20% equity, a new lender may charge lenders mortgage insurance (LMI) again.
- Compare what's on offer. Look at the comparison rate (the interest rate plus most fees) and the features you actually use, such as an offset account or redraw.
- Ask your current lender first. Tell them you're thinking of switching. They may cut your rate to keep you, which can be the cheapest option of all.
- Count every switching cost (see the table below).
- Keep the loan term similar. Resetting to a new 30-year term lowers repayments but usually adds interest overall.
- Work out the payback time. How many months of lower repayments it takes to cover the switching costs.
- Check your timing. Is a fixed-rate period ending soon? Breaking it early can cost more than waiting.
Switching costs to count
| Cost | When it applies |
|---|---|
| Discharge fee | When you close your current loan |
| Break fee | If your current loan is on a fixed rate |
| Application or establishment fee | When you take out the new loan |
| Switching fee | If you change loans with the same lender |
| Lenders mortgage insurance | If you have less than 20% equity |
| Stamp duty or government fees | Sometimes; check with your lender |
As at 27 October 2026. Source: Moneysmart.
If you paid LMI on your current loan, ask whether any of it can be refunded when you switch. Our refinance calculator shows how long it takes to recover your switching costs.
When refinancing may not be worth it
- The saving is small and the switching costs take years to recover.
- You're on a fixed rate with a large break fee, and the fixed period ends soon.
- You have less than 20% equity, so LMI would apply again.
- Your current lender matches the new rate when you ask.
Other reasons people refinance
- Moving to a loan with an offset account or better features
- Consolidating other debts into the home loan (which can cost more interest over a longer term)
- Releasing equity, for example to renovate or buy an investment property
- Changing the loan after a separation, such as buying out a partner's share
How MoneyGenie helps
- Reviews your current loan against options from our panel of lenders, including whether staying put is the better choice.
- Adds up the switching costs with you, so you can see how long any saving takes to pay them back.
- Handles the switch, from application to discharging your old loan.
Nabita compares options from MoneyGenie's panel of 35+ lenders, tells you upfront which are realistic for your situation, and handles the application with you through to settlement. Our service is generally at no cost to you, as we're paid a commission by the lender, which we disclose to you upfront. Details are in our Credit Guide, available on request. Talk to Nabita: call 040 110 1608 or send an enquiry.
Call 040 110 1608 Send an enquiryLast reviewed by Nabita, mortgage broker, MoneyGenie Finance.
Official sources
Frequently asked questions
How often should I review my home loan?
Every one to two years is a good habit, and also when interest rates change, when a fixed-rate period is ending, or after a big life change such as a new job or a baby.
Will my lender give me a better rate if I ask?
Sometimes. Moneysmart says your lender may reduce your rate to keep your business, especially if you have at least 20% equity and a good credit score. It's worth asking before you switch.
Do I pay lenders mortgage insurance again if I refinance?
You may, if you have less than 20% equity in your home. Moneysmart warns this can increase the cost of switching and outweigh the savings.
Does refinancing to a longer loan term save money?
It can lower your repayments, but a longer loan usually means paying more interest overall. Moneysmart suggests keeping a similar term to your current loan.
The rules and figures in this guide were checked against the official sources above on the review date. Government rules and lender policies change, so check your own situation with us or the relevant authority before acting.