A lower advertised rate can be useful, but it is not the whole refinance decision. The practical question is whether the saving after a switch covers the costs of leaving and setting up the new loan in a time that makes sense for your plans.
Start with the monthly repayment difference
Use the same loan balance and remaining term for both loans, then compare the repayment at your current rate with the new rate. The difference is your starting monthly saving. It is an estimate, not a quote: lender fees, repayment type and the actual loan term can all change the result.
The refinance comparison tool shows this side by side. For a broader repayment comparison, use the Repayment Estimator.
List the switching costs before you decide
The costs vary by lender and loan type, but a useful checklist includes:
- Discharge or settlement fees from the current lender.
- Application, valuation and settlement fees for the new loan.
- Government registration or mortgage fees where applicable.
- Fixed-loan break costs if you are leaving a fixed-rate loan early.
- Lenders Mortgage Insurance (LMI) if the new loan has a high loan-to-value ratio.
- Any cashback conditions or package fees that alter the real first-year result.
Ask both lenders for a written breakdown. A cashback can be worthwhile, but it should not hide a higher ongoing rate or fee.
Calculate the break-even period
Divide the total switching costs by the monthly saving. For example, $1,200 of switching costs and a $100 monthly saving gives a break-even point of about 12 months.
That does not automatically mean you should refinance. It tells you how long you need to keep the new loan before the lower repayment has covered the upfront costs. If you expect to sell, pay down the loan quickly or change the structure soon, a long break-even period matters.
Check the loan features, not only the headline rate
Compare the features you actually use: offset account access, redraw rules, extra repayment limits, fixed-rate flexibility, annual fees and customer support. A lower rate can be less valuable if it removes a feature that saves you money or makes your cashflow harder to manage.
A sensible next step
Run two or three realistic rate scenarios in the Refinance Break-Even Calculator, then take the figures to your current lender and at least one competing lender or broker. Ask whether your existing lender can match the rate before paying to move.