The short answer
The costs of refinancing usually include a discharge fee to close your current loan, government fees to discharge the old mortgage and register the new one, and any application or settlement fees on the new loan. A fixed rate loan may also have a break fee, and with less than 20% equity you may pay lenders mortgage insurance (LMI) again. Refinancing can save money when the savings over time are more than these costs.
The costs to check
- Break fee. If your current loan is on a fixed rate, leaving early may mean a break fee. The amount depends on your loan and on how rates have moved since you fixed, so a quote from your lender shows the actual cost.
- Discharge (or termination) fee. Charged by your current lender when you close the loan.
- Government fees. State land registries charge to discharge the old mortgage and register the new one. Each state sets its own fees.
- Application or establishment fee. An upfront fee some lenders charge on the new loan.
- Valuation and settlement fees. Some lenders charge these; check the new lender’s fee schedule.
- Lenders mortgage insurance (LMI). If you have less than 20% equity, the new lender may charge LMI, even though you paid it on your current loan. See what LMI is.
- Switching fee. If you stay with your current lender but move to a different loan, there may be a fee for that.
- Stamp duty. Moneysmart says you may be liable for stamp duty when you refinance, and to check with your lender.
Costs that are easy to miss
- A longer loan term. If your new loan runs for 30 years when you had 24 left, your repayments drop but you pay interest for longer. Moneysmart suggests asking for a term similar to the time left on your current loan.
- Ongoing fees. A lower rate with a monthly or annual package fee can cost more than it saves. The comparison rate helps you compare, as it includes most fees.
- Losing features. If you rely on an offset account or redraw, check the new loan has them.
Switching would cost $1,500 in fees and lower the repayments by $150 a month. It takes about 10 months to recover the costs. After that, the lower repayments are a saving, if the loan and rate stay the same.
A simplified illustration only. Your costs and savings depend on your loan, the new loan and the fees that apply.
Want to know if switching pays for you? We’ll check your exit costs and compare lenders on our panel.
Book My Loan ReviewHow to check if refinancing pays
- Get your exit costs. Ask your current lender for a payout figure, including any break fee and discharge fee.
- Ask your lender for a better rate. Moneysmart suggests telling your lender you plan to switch, as they may cut your rate to keep you.
- Add up the costs of the new loan. Application, valuation and settlement fees, government fees, and LMI if it applies.
- Compare the savings. Use the refinance calculator to see how long it takes to recover the costs.
Who does what
As mortgage brokers, we compare lenders on our panel, check the costs of switching and handle the paperwork with the new lender. We don’t charge you for our service. Lenders pay us a commission if you go ahead with a loan.
Source: Moneysmart (ASIC), “Switching home loans”, last updated 3 November 2026, read 9 November 2026.
Mortgage broker at My Finance Consultants. Daniel compares home loan options from a panel of 40+ lenders for refinancers, investors and home buyers, by phone or video, evenings included. About Daniel
General information only. It doesn’t consider your objectives, financial situation or needs, and it isn’t tax, legal or financial product advice. Lending criteria, fees and charges apply.