Refinance

Refinancing costs explained

A guide to common refinance costs such as discharge fees, application fees, valuation fees, government charges, break costs, and package fees.

Updated: 29 July 2026
Read time: 7 min read
Reviewed by: emoney broker team

Key checks before you decide

Reviewed by emoney broker team. Updated 29 July 2026. Sources are listed below.

List current-lender, new-lender, settlement, government, and ongoing costs before comparing savings.
Check fixed break costs, discharge fees, valuation fees, package fees, LMI, and loan-term changes separately.
Use a break-even calculation before relying on a lower repayment or cashback offer.
Ask whether repricing or restructuring with the current lender could solve the goal at lower friction.

In this guide6 sections

Some costs are upfront Fixed loans need extra care Compare the payback period Watch for costs that are easy to miss Ask the broker to compare more than rate Use the calculator before lodging

Some costs are upfront

Refinancing can involve costs from the current lender, the new lender, and settlement. Some are paid upfront, some may be added to the loan, and some depend on lender policy or loan structure.

The cost stack should be built before the borrower judges the rate or repayment. MoneySmart warns that switching can include costs such as application, settlement, discharge, break fees, stamp duty in limited circumstances, and other charges, so the comparison needs more than one monthly number.

Separate costs by who charges them. Discharge or break costs may come from the current lender, application or package fees from the new lender, and registration, legal or settlement-agent costs from the settlement process.

Also separate one-off costs from ongoing costs. A small annual package fee can matter over several years, while a one-off discharge fee may matter most when the borrower expects to keep the new loan only briefly.

Cost area	What it can include	Borrower check
Current lender	Discharge fee, fixed-rate break cost, payout figure, account closure steps.	Ask for a written payout and break-cost estimate before relying on savings.
New lender	Application, valuation, package, annual, account, or settlement-related fees.	Check whether the fee is upfront, ongoing, waived, or added to the loan.
Government and settlement	Registration, discharge registration, settlement agent, legal, or title-related costs.	Confirm timing and whether any amount must be paid from cash.
Risk and structure	Possible LMI, larger loan balance, longer term, lost offset value, or feature changes.	Compare the total cost alongside the first repayment.
Incentives	Cashback, fee waiver, introductory rate, or package discount.	Check eligibility, clawback rules, rate, fees, and minimum hold period.

Discharge, settlement, and government registration charges.
Application, valuation, package, or annual fees.
Legal or settlement agent costs where applicable.
Costs connected to changing loan type, lender, or security.

Watch out

Fixed loans need extra care

Changing a fixed-rate loan before the fixed period ends can create break costs. The amount can depend on lender calculations, interest-rate movements, remaining fixed term, and loan balance, so it should be checked before comparing savings.

A fixed break-cost estimate can change before settlement, so it should not be treated as permanent unless the lender confirms the timing and conditions. A refinance that looks sensible before break costs may look different once the payout figure is updated.

If the fixed period is close to ending, the borrower may need to compare moving now with waiting, refixing, splitting or rolling to variable. Compare the rates, then ask whether the timing and cost make a change worthwhile.

Ask the current lender for a break-cost estimate before acting.
Check whether the estimate can change before settlement.
Compare the cost with the benefit of moving early.
Consider whether waiting until expiry is more practical.

Example

Compare the payback period

A refinance saving is clearer when you compare estimated monthly benefit with the total cost to switch. The payback period helps show how long it may take before the move has recovered its costs.

A simple break-even check is total switch cost divided by estimated monthly saving. For example, if a borrower estimates $1,200 in switching costs and $100 per month in benefit, the rough payback period is 12 months before other assumptions are considered.

That example is only a planning calculation. It still needs review because the monthly difference can change with rate movements, fees, term length, offset behaviour, cashback conditions, settlement timing, and whether the borrower expects to keep the loan long enough.

Add known current-lender and new-lender costs.
Estimate the monthly repayment or interest difference.
Check how long you expect to keep the property or loan.
Ask whether fees, cashback, or loan term changes alter the result.

Watch for costs that are easy to miss

Some refinance costs are not obvious in the headline rate. A longer term, reduced offset value, new package fee, or LMI at a higher LVR can reduce the benefit.

The largest hidden cost is often not a visible fee. Resetting the loan to a longer term can lower the monthly repayment but increase total interest over time. That may still be a deliberate cash-flow choice, but it should be understood before the borrower acts.

LMI can also re-enter the conversation if the refinance increases the loan amount, releases equity, consolidates debt, or the valuation comes in lower than expected. The borrower should check the LVR and equity position before assuming a switch is low-cost.

Feature changes can carry a cost too. Losing a useful offset account, changing redraw access, or moving to a product with different repayment restrictions can reduce the practical value of a cheaper-looking loan.

LMI if equity is too low or the loan amount increases.
Package fees, annual fees, account fees, or offset fees.
Cashback conditions and minimum hold periods.
A longer term that reduces repayment but increases total interest.

Next step

Want a broker to check this against your situation?

Share the loan goal, timing and a few key details. An emoney broker can then pick up the enquiry with the relevant context.Check refinance savings

Broker note

Ask the broker to compare more than rate

A broker can test whether the refinance fits the goal after lender policy, documents, valuation, settlement timing, fees and the current lender's options are considered.

The broker conversation should connect costs to the reason for refinancing. A borrower trying to reduce pressure may accept a different trade-off from a borrower trying to pay down the loan faster or use equity for another property.

Ask for the comparison to show staying, repricing, restructuring, and switching where relevant. That makes it easier to see whether a lender change is solving the problem or simply adding paperwork to reach a similar result.

If the answer is not clear, pause at the review stage. A broker can usually identify which missing document, valuation assumption, cost, or lender-policy question must be resolved before the borrower commits to a path.

Would current-lender repricing solve the problem?
What costs should be included in the comparison?
Does the new loan term change the total interest picture?
What documents or valuation issues could affect the option?

Broker note

Use the calculator before lodging

Estimate the savings before an application so the broker can challenge costs and assumptions before lender work begins.

Run the estimate with conservative assumptions first. Add the known costs, avoid relying only on cashback, and test a shorter hold period so the borrower can see whether the benefit disappears if the loan is changed again soon.

Save the assumptions for the broker conversation. If the result depends on excluding a fee, extending the term, assuming a high valuation, or ignoring a fixed break cost, that assumption should be checked before the application is lodged.

A cost estimate is strongest when the borrower can point to the exact figures used. Keep the current repayment, proposed repayment, known fees, estimated benefit, and planned hold period together for review.

Run the estimate with conservative savings.
Add every known cost, even small ones.
Save the scenario for the broker conversation.
Check whether the result still works if settlement takes longer than expected.

Calculator next step

Refinance savings calculator

Compare the current loan with a new-rate scenario and see whether switching costs may be recovered.

Best for: Deciding whether a refinance is worth a broker review before starting lender work.
What it calculates: Current repayment, new repayment, estimated switching costs, monthly difference, and rough break-even.

A broker still needs to check discharge costs, valuation, features, cashback rules, income, documents, and lender policy.

Open Refinance savings

Sources used

ASIC MoneySmart choosing a home loan
ASIC MoneySmartofficial sourceChecked 29 July 2026
ASIC MoneySmart switching home loans
ASIC MoneySmartofficial sourceChecked 29 July 2026
ASIC MoneySmart using a mortgage broker
ASIC MoneySmartofficial sourceChecked 29 July 2026
Reserve Bank of Australia cash rate target
Reserve Bank of Australiaofficial sourceChecked 29 July 2026

General information only

This guide is general information and does not take into account your objectives, financial situation, or needs. A broker can review your circumstances before any recommendation.

Next step

Want a broker to check what applies to you?

Share the goal, timing and current loan context in Quick Check so the broker knows what needs reviewing.

Check refinance savings View related service