When is refinancing a home loan worth it?

Refinancing is generally worth reviewing when the estimated first-year saving clearly exceeds the cost of switching. On a typical Australian loan, a rate difference of around 0.4–0.5 percentage points or more often produces a first-year saving above $2,500 once fees are counted.

How much does it cost to refinance?

Typical costs include a discharge fee from your current lender, government registration fees and sometimes application or valuation fees — often totalling around $700 to $1,500, more if Lenders Mortgage Insurance applies.

Knowledge base / Refinancing

When is refinancing your home loan worth it?

Q: Does refinancing hurt your credit score?

A refinance application creates a credit enquiry, which can have a small, short-lived effect. A single considered application is unlikely to cause meaningful damage; repeated applications in a short period can.

Secure Finance · Refinancing · Updated July 2026

Refinancing is generally worth reviewing when the first-year dollar saving clearly exceeds the cost of switching. On a typical loan, a rate gap of around 0.4–0.5 percentage points often clears that bar — which is why Rate Monitor uses a $2,500 first-year saving benchmark before we suggest a review.

The only maths that matters: saving vs switching cost

A lower advertised rate means nothing by itself. What matters is the net first-year saving: the repayment reduction over twelve months, minus everything it costs to move. Refinancing usually costs somewhere between $700 and $1,500 in discharge, application and government fees — see how much refinancing actually costs.

As a worked example: on a $550,000 loan with 25 years remaining, moving from 6.35% to 5.79% reduces repayments by roughly $190 a month — about $2,300 a year before fees. Push the gap a little wider, or the balance a little higher, and the first-year saving moves comfortably past $2,500. You can run your own numbers in the Rate Savings Calculator.

Situations where refinancing often stacks up

You haven't reviewed the loan in 12+ months. Lenders rarely pass their sharpest pricing to existing customers — the loyalty tax builds quietly.
Your fixed rate is about to expire. Revert rates are often far above new-customer rates — see what happens when a fixed rate expires.
Your equity has grown. A lower loan-to-value ratio can unlock cheaper pricing tiers you didn't qualify for at settlement.
Your loan lacks features you now need — an offset account, split facility, or better repayment flexibility.

Situations where it often doesn't

Small balances or short remaining terms — the dollar saving on the gap may never cover the switching costs.
Big fixed-rate break costs — breaking a fixed term early can wipe out years of savings; always get the break fee quoted first.
LMI would apply again — if your equity is under 20%, new Lenders Mortgage Insurance can dwarf any rate saving.
Restarting a 30-year term to lower repayments — this can reduce monthly pressure but increase total interest paid over the life of the loan.

Why a dollar benchmark beats a rate benchmark

A 0.25% saving is worth very different amounts on a $250,000 loan versus a $900,000 one. That's why Rate Monitor works from a dollar figure: we look for savings opportunities where your potential first-year interest saving may be at least $2,500 — whether from a better rate with your current lender or a completed refinance. Below that level, the disruption often isn't worth your time — so we don't call.

FAQ

Does refinancing hurt your credit score?

An application creates a credit enquiry with a small, short-lived effect. One considered application is generally fine; many applications in quick succession are not.

How long does refinancing take?

Commonly two to six weeks from application to settlement, depending on the lenders involved and how quickly documents come together.

Can I refinance an investment or SMSF loan?

Yes — investment loans refinance much like owner-occupied ones, while SMSF loans have a smaller lender panel and usually need a manual broker review.

Not sure your gap clears the bar?

Set up free monitoring and Secure Finance will contact you only when you could save $2,500+ in the first year — via your lender or a refinance.

Start free monitoring Run the numbers first

General information only, prepared by Secure Finance Services Pty Ltd (ACL 465059). It does not consider your objectives, financial situation or needs. Any estimated saving is subject to your loan details, lender eligibility, fees, valuation, credit assessment and final refinance approval.