Refinancing can save you thousands, but it isn't free. The good news is that for most variable rate borrowers, the costs are modest and the savings cover them within months.
Here's what to expect.
The common costs
Discharge fee (outgoing lender)
Your current lender charges a fee to close your loan and release the mortgage. This is commonly a few hundred dollars. Check your loan contract or ask your lender.
Government registration fees
Your state's land titles office charges a fee to remove the old mortgage and register the new one. In NSW these are set fees, adjusted each financial year, and usually total a few hundred dollars across both.
Application or establishment fee (new lender)
Many lenders now charge no application fee for refinancers. Some do, and some premium packages charge an annual fee instead.
Valuation fee
Most lenders cover the valuation. A few charge for it, especially for specialist loans.
Settlement fee
Some lenders charge a settlement fee. Again, many don't.
The costs that can be big
Fixed rate break costs
If you're on a fixed rate and leave early, the lender may charge break costs. These depend on:
- How much you owe
- How long is left on the fixed term
- How market rates have moved since you fixed
When rates have risen since you fixed, break costs are usually small or nil, because the lender can re-lend your money at a higher rate. In 2026, with fixed rates climbing, many borrowers who fixed earlier will find break costs lower than they expect. Always ask your lender for a written estimate.
Lenders Mortgage Insurance
If you refinance above 80% of your property's value, the new lender will usually charge LMI, even if you paid LMI when you first bought. LMI isn't transferable between lenders.
This matters in 2026. With values down over the year in Sydney and Melbourne, some borrowers who were at 78% LVR a year ago may now be above 80%.
Typical total costs
For a straightforward variable to variable refinance under 80% LVR, total costs often come to under $1,000. Cashback offers can sometimes cover them entirely.
Is it still worth it?
Work out your break-even point: how many months of savings it takes to cover the costs.
Example: - Loan: $550,000, 25 years left - Current rate: 6.89% - New rate: 6.29% - Monthly saving: about $207 - Costs: $900
Break-even: about 4.4 months. After that, it's all savings. Over five years that's roughly $12,400 in lower repayments.
If break-even is more than a year or two away, think carefully, especially if you might sell or move soon.
Ways to reduce costs
- Choose a lender with no application or settlement fees.
- Look for refinance cashback offers, but don't pick a worse loan just for the cash. See are refinance cashback offers worth it?.
- Avoid refinancing above 80% LVR if you can, to avoid LMI.
- Time it with your fixed rate expiry to avoid break costs.
- Ask your current lender to match. If they do, you avoid all switching costs.
Hidden cost: extending your loan term
If you have 24 years left and refinance into a new 30-year loan, your repayments drop partly because you've stretched the loan. You'll pay more interest over time. To avoid this, either choose a shorter term or keep paying your old repayment amount.
Frequently asked questions
Can I add refinancing costs to my new loan?
Often yes, as long as the total stays within the lender's LVR limits.
Do I have to pay LMI again if I already paid it?
Usually yes, if you're refinancing above 80% LVR with a new lender. LMI doesn't transfer.
Are there tax deductions for refinancing costs?
For investment loans, some borrowing costs may be deductible over time. Ask your accountant.
Want an exact breakdown of what it would cost you to switch, and how fast you'd break even? Call Finfident on 0424 545 654.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.