Refinancing Calculator Australia

How to Use This Refinancing Calculator

Enter your current loan balance, rate and remaining term, then the rate you've been quoted by a new lender. The calculator works out your monthly saving, how long it takes to recover the switching costs, and how much you'd save over the rest of the loan. It also flags the most common Australian refinancing trap: lenders quietly resetting your loan back to 30 years.

Is Refinancing Worth It? The 1% Rule and What It Actually Means

You may have heard that refinancing is worth it once your rate is 1% lower than what you're paying. It's a useful rule of thumb, but it isn't the whole story. A 1% drop on a $500,000 loan is around $300 per month. Over 25 years that's tens of thousands of dollars. But the real question is whether the saving outweighs the switching costs, factoring in how long you plan to keep the loan.

A more accurate way to think about it: if break-even is under 24 months and you plan to stay put for at least that long, refinancing usually pays off. If break-even is over 48 months, the saving may not be worth the effort. Anywhere in between is borderline and depends on your circumstances.

The Break-Even Point Explained

Break-even is the moment your accumulated monthly savings have repaid the cost of switching. The maths is simple: divide your total switching costs by your monthly saving. If switching costs you $1,500 and you save $250 per month, you break even after 6 months. From month 7 onwards, every dollar saved is actually in your pocket.

If you sell the property, refinance again, or pay the loan off before break-even, you lose money on the switch. That's why break-even matters more than the headline monthly saving. The savings over time chart above shows exactly when you cross into positive territory.

The Loan Term Reset Trap

This is the single most common mistake Australian refinancers make, and most lender calculators don't even show it. When you refinance, your new lender usually defaults to a fresh 30-year term, regardless of how long you've been paying off your existing loan. The monthly repayment looks great. The lifetime cost often doesn't.

Here's why it matters. If you're five years into a 30-year loan and you reset to a new 30-year term, you've quietly added five years to your mortgage. Even at a lower rate, that extra time usually adds tens of thousands in interest. On a $500,000 refinance at 5.65%, keeping a 25-year remaining term costs about $427,000 in interest over the life of the new loan. Resetting to 30 years costs about $538,000. That's $111,000 more, paid by you, simply because you didn't ask for a specific term.

The fix is straightforward: ask your new lender to match your current remaining term. Most lenders can accommodate specific terms (23 years, 27 years, etc.), they just need to be asked. Use the "Term Reset Check" tab above to see the numbers for your situation.

What Refinancing Costs in Australia

Total refinance costs in Australia typically range from $500 to $2,000 if you're switching to a new lender. The main components are a discharge fee from your current lender (usually $150 to $400), an application or establishment fee with the new lender ($0 to $600, often waived), a property valuation fee ($0 to $600, also often waived), a settlement or legal fee ($200 to $500), and government registration fees ($100 to $200).

Most lenders waive at least one or two of these fees for refinance applications, particularly when they know there's a competing offer. Always ask. A 10-minute phone call can save you a few hundred dollars. The cost breakdown tab in the calculator lets you adjust each fee individually based on what your lender has actually quoted.

Fixed-Rate Break Costs and the 2026 Fixed-Rate Cliff

If you're on a fixed rate, exiting early triggers a break cost. The figure compensates your lender for the difference between your fixed rate and current market rates, multiplied by the time left on the fixed period. Break costs are notoriously unpredictable. They can be a few hundred dollars one month and tens of thousands the next, depending on rate movements.

Always request a written break cost quote from your current lender before deciding. The quote is usually valid for 24 to 72 hours, so be ready to act if the number works in your favour. If you're in the wave of borrowers whose fixed rates expire in 2026, see our fixed rate expiry guide for what to do next.

Cashback Offers: Should They Change Your Decision?

Cashback offers come and go in the Australian market. As of June 2026, several non-bank and second-tier lenders are offering refinance cashbacks between $2,000 and $4,000, with one specialist lender offering up to $10,000 on loans above $2 million. The big four largely withdrew from cashback offers in 2023, though some have re-entered with smaller incentives or Qantas Points.

A cashback can completely cover your switching costs and effectively pay you to refinance, which is great. But lenders sometimes price the cashback into a slightly higher interest rate or stricter conditions, so it's never wise to choose a lender just because of the cashback alone. Use the comparison rate to compare the lifetime cost of the loan first, then treat the cashback as a bonus.

Before You Refinance: Try Negotiating With Your Current Lender First

This is the tip most articles don't lead with. Before you start a formal refinance application, phone your current lender, tell them you've been quoted a lower rate elsewhere, and ask what they can do. Many Australian lenders have retention teams whose entire job is to discount rates for customers thinking about leaving. Acquiring a new customer costs lenders thousands. Keeping you costs a small rate discount.

A retention discount of 0.30% to 0.50% is common, and sometimes you'll get more. If your lender matches the competing rate, you've effectively refinanced without paying any switching costs at all. If they don't, you can still refinance elsewhere with the same information.

When Refinancing Might Be Declined

It surprises many borrowers, but refinancing applications get declined regularly, even when you've been paying your existing loan reliably for years. The reason is usually the APRA serviceability buffer, which requires lenders to assess your application at 3 percentage points above the actual rate. With variable rates around 6%, you're being assessed at 9%, even though you'd never actually pay that.

If your income has dropped, your expenses have increased, or your situation has changed in any way that affects serviceability, the buffer can lock you out even of a lower rate. This is sometimes called the "mortgage prisoner" problem. If you've been declined or you think you might be, talk to a specialist before applying, since formal declines can hurt your credit file. For borrowers with credit issues, see our refinancing with bad credit page.

Refinancing for Cash-Out, Debt Consolidation or Term Change

Not every refinance is just about a lower rate. People refinance to access equity for renovations or investing, to consolidate credit cards and personal loans into the mortgage at a lower rate, or to change the structure of the loan entirely. Each path has different considerations.

Cash-out refinancing replaces your existing loan with a larger one and gives you the difference in cash. Debt consolidation does the same but uses the cash to pay off other debts. Both can make sense, but they extend the term over which you're paying interest on what was previously a short-term debt. For the full picture on each option, see our pages on cash-out refinancing and debt consolidation refinancing. If you're refinancing an investment property or commercial loan, the rules and tax implications are different again, covered on investment property refinancing and commercial property refinancing.

Tips for Getting the Most Out of This Calculator

Use the comparison rate, not the headline rate, when entering the new loan's interest rate. The comparison rate includes most fees and gives a truer picture of the annual cost. The headline rate often hides ongoing fees that erode your saving over time.

Be honest about your switching costs. The defaults in the calculator are typical Australian figures, but your specific lender may charge more or less. If you've already received a written loan offer, plug the actual fees in.

Test the rate stress tab. Variable rates rose 25 basis points in June 2026 and the RBA's path remains uncertain. Even if your new rate looks fantastic today, check that the saving still holds up if it rises by 1 to 2 percentage points. If the numbers fall apart at +2%, you're cutting it too fine.

Run the calculation twice: once with "Keep current term" and once with "Reset to 30 years." Compare the lifetime interest figures. Most people are shocked by the difference. The lifetime cost is the number that matters most, even if the monthly repayment is what shows up on your bank statement.