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Background

Cost to refinance a home loan in Australia

  • It’ll cost anywhere between $500 to $2,000 to refinance a home loan, but actual costs will vary between loans and lenders.
  • Some lenders might waive certain fees, while others could offer cashback incentives to cover all refinancing costs.

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A couple looking at mortgage documents on their kitchen table as they consider to refinance

How much does it cost to refinance a home loan?

Refinancing a home loan in Australia typically costs between $500 and $2,000, according to our most recent analysis. The exact amount depends on whether you’re staying with the same bank but changing your loan, or moving to a new lender.

If you’re refinancing internally (sticking with your current bank), the fees are often lower than if you’re refinancing externally (switching to a new lender).

Common costs for refinancing include application fees, property valuation fees, legal fees, and exit fees. Some lenders might waive fees or offer incentives, such as cashback deals, to offset refinance costs and encourage you to switch.

Fees for refinancing a mortgage

Here are some key costs that are associated with refinancing:
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Exit fee (discharge fee)

$350 - $500

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Deregistration/registration fee

$130 - $250 (x 2) depending on your state

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Title search fee

$50 - $100

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Application fee

$0 - $750

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Settlement fee

$100 - $400

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Property valuation fee

$50 - $600

You can often negotiate with your new lender to lower or eliminate the upfront costs of your loan. If the lender offers cashback for refinancing with them, it might cover or exceed the costs.

If your new loan requires you to borrow more than 80% of your home’s value, you may need to pay lender’s mortgage insurance (LMI), which can be several thousand dollars.

Banks use different names for refinancing fees. Your bank manager or mortgage broker can explain these costs and help you understand which fees apply to you. This will help you decide when to refinance and if it is worth it.

Can you negotiate refinance fees?

Yes, you can usually negotiate refinance fees. Many lenders are willing to adjust fees or offer incentives to attract new customers and retain existing ones. Here are some ways you can approach it:

1

Ask about discounts

See if the lender can reduce or waive certain fees, such as application or legal fees.

2

Leverage competitor offers

Use offers or incentives from other lenders as a bargaining chip to negotiate better terms.

3

Review cashback deals

Some lenders offer cashback for refinancing with them, which can offset or even cover the costs associated with refinancing.

4

Ask for a better rate

If there are high refinancing costs, you might be able to save money elsewhere by getting the lender to offer a shaper interest rate.

Sean Callery Editor Money.com.au

Sean Callery, Editor of Money

"When I recently refinanced, we had a split loan and our old lender was initially going to charge two discharge fees, as technically we had a fixed and a variable rate loan. I asked nicely and managed to negotiate away one of the discharge fees, saving us $350."

Sean Callery, Editor of Money

Is refinancing worth the cost?

If you refinance to a lower rate, refinancing is usually worth the costs involved in the long run. The lower the rate, the more money you’ll save in interest charges over the loan term.

Additionally, calculate the break-even point - the time it takes to recoup the refinancing costs. If you plan to stay in your home long enough to reach this point, and refinancing aligns with your long-term financial goals, it could be a solid strategy.

For example:

Home loan amount

Current interest rate

$600,000

6.49%

Home loan amount

Current monthly repayments

$600,000

$3,930

Home loan amount

Refinance interest rate

$600,000

5.99%

Home loan amount

New monthly repayments

$600,000

$3,741

Home loan amount

Monthly savings

$600,000

$189

Home loan amount

Refinance fees

$600,000

$1,000

Home loan amount

How long will it take to break even?

$600,000

Roughly five months

Home loan amount$600,000

Current interest rate

6.49%

Current monthly repayments

$3,930

Refinance interest rate

5.99%

New monthly repayments

$3,741

Monthly savings

$189

Refinance fees

$1,000

How long will it take to break even?

Roughly five months

To work out the break-even point, simply divide the total refinance cost by the savings on monthly repayments by switching to the new loan. This example assumes a loan term of 27 years and that the interest rate will remain over the same period.

Before refinancing, check the current interest rates from different lenders and compare them to your existing rate. Get to know your financial details, like your loan-to-value ratio (LVR) and credit score. Contact your bank and request a better rate. Most lenders will want to keep your business, especially if you have a high loan amount (e.g. above $600,000).

Home loans guides & resources

What's the next step on your property journey? Our home loan guides will help you navigate the road ahead, whether you're buying, building or looking to save on an existing loan.

Jared Mullane is a finance writer with more than eight years of experience at some of Australia’s biggest finance and consumer brands. His areas of expertise include energy, home loans, personal finance and insurance.

Sean Callery is the Editor of Money.com.au. He has over 15 years of international experience. He is qualified with a Certificate IV in Finance and Mortgage Broking (FNS40821) and is compliant to provide general advice in Tier 1 General Insurance (RG 146) products.

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