Reviewed by Sana Hosseini, Medical Mortgage Broker and Australian Credit Representative 371443.
Refinancing replaces your current home loan with another loan. It can change the interest rate, repayment structure, features or lender, but the advertised rate is only part of the decision. The useful question is whether the new loan’s likely benefits exceed all switching costs over the period you expect to keep it.
List the one-off costs first
Ask your current lender for a payout figure and a list of discharge or settlement charges. Ask the new lender about application, valuation, legal and settlement fees, if any. A fixed-rate loan can have break costs that are material and change with market conditions; obtain an actual quote rather than guessing. Depending on the transaction and location, government or registration charges may also apply. ASIC Moneysmart’s switching guide walks through costs to check.
Compare ongoing cost on the same basis
Place the old and proposed loans side by side using the same remaining balance, repayment type and comparison period. Include interest, ongoing package/account fees and any change in offset or redraw features. If the proposed loan stretches the remaining debt over a new 30-year term, the monthly repayment can fall while total interest rises. Compare like with like before treating a lower payment as a saving.
For a simple break-even estimate, divide net switching costs by estimated monthly saving. For example, if switching costs are $1,200 and the verified monthly saving is $100, the simple break-even point is 12 months. This is only a screening calculation: actual balances, rate changes, fees and offset use will alter the result. If you expect to sell, move or refinance again sooner, a modest rate reduction may not justify the costs.
Account for the features you actually use
An offset account may matter to a practitioner who holds savings between irregular income payments; redraw may suit a different pattern. Their rules and fees differ. A fixed rate may offer certainty but can restrict extra repayments or make an early switch costly. Moneysmart’s offset guide and fixed-versus-variable guide explain these trade-offs.
Medical-professional considerations
If you have moved from salary to locum work, bought a practice, changed roster or taken on equipment finance since your original loan, the new lender will assess your current position. A previous approval is not transferable. Gather updated income and debt evidence, and ask whether a profession-based policy actually improves the total offer. Avoid refinancing solely because a competitor advertises an LMI concession or cashback; compare the complete cost and conditions.
Questions for a refinancing review
- What is the exact payout amount and any fixed-rate break cost today?
- What are all new-loan and government charges?
- Are the two loans being compared over the same remaining term?
- What features would be gained or lost?
- How many months before expected savings exceed switching costs?
- Can the current lender offer a competitive retention rate without switching?
For an individual comparison, read refinancing for medical professionals or book a home-loan review.General information only. Any example is illustrative, not a quote or forecast. Approval, rates, fees and costs depend on current lender terms and personal circumstances.
See whether a refinance adds up
Compare the break-even point, ongoing repayments and the features you would actually use.
Two-minute self-check
Frequently asked questions
Is refinancing free?
Usually not. Even when an offer waives some fees, other exit, setup, valuation or government charges may apply.
How do I find a break-even point?
Divide the net upfront cost by a realistic monthly saving, then check whether the assumptions and loan features still suit you.