Cost to refinance home loan: every fee and the break-even point

What you pay to leave, and to arrive

Start with what you pay to leave. Your current lender charges a discharge fee for the admin work of releasing its mortgage. Each lender sets its own figure and prints it in the fee schedule you agreed to at settlement. A few hundred dollars is normal. Westpac, for example, lists $350.

Then comes what you pay to arrive. The new lender may want an application or settlement fee, though plenty waive it to win your business. Moneysmart's switching example uses application fees of $300 and $600, which is the size you should expect. A valuation is sometimes billed on top and sometimes folded in.

The government charges twice as well, once to take the old mortgage off the title and once to put the new one on. More on that below.

State fees on the title

Every state and territory land registry charges a fee for each dealing on your title. A refinance needs at least two dealings. The old loan comes off the title, and the new one goes on.

In New South Wales each dealing costs $166.60 in 2026-27, so the pair comes to about $333. Other registries run their own schedules. As a guide, budget a few hundred dollars for the pair in most of the country. These figures change every July, so confirm your state's current schedule before you sign. Treat anything else, this page included, as indicative.

Break costs on a fixed rate

A fixed rate is a promise, and your lender funded that promise on wholesale markets the day you locked it. Leave early and the lender wears the gap between the rate it secured then and the rate it can get now. The break cost passes that gap on to you.

If wholesale rates rose after you fixed, the figure may be zero. If they fell, it can run to many thousands on a big balance. It also moves with the market from week to week, so a quote has a short shelf life. Only your lender can tell you the number. Ask for a payout figure before you plan anything around it.

One exit charge is gone for good. The federal government banned exit fees on new home loans from 1 July 2011. On a variable loan signed after that date, leaving usually costs the discharge fee and the state fees, and nothing else. The ban covered back-end charges such as deferred establishment fees. It never covered fixed rate break costs.

When lenders mortgage insurance comes back

Lenders mortgage insurance protects the lender, not you, and a premium paid at your old bank does not move with you. Refinance with less than 20 per cent equity and the new lender can charge a fresh one. Moneysmart warns that this single cost can outweigh the whole rate saving, and it is right.

If your equity sits just under the line, waiting is often the cheapest move. A year of repayments, or a modest lift in prices, can carry you past 20 per cent and take the premium off the table.

Restarting the 30 year clock

Most refinance offers default to a fresh 30 year term, no matter how many years you had left. The repayment falls, so the new loan looks cheaper. Over the life of the debt it is anything but.

Here is the maths, on illustrative figures computed with the standard loan formula. Stretch $500,000 at 5.60 per cent from 25 years back out to 30 and the repayment drops by about $230 a month. Total interest climbs from about $430,000 to about $533,000. That is an extra $103,000 for the same debt. Moneysmart's advice is blunt: ask for a term close to the one you had left.

The break-even month, worked through

Now the sum that decides the whole question, again on illustrative figures. Say you owe $500,000 with 25 years left at 6.00 per cent, and a new lender offers 5.60 per cent over the same term. The repayment falls from about $3,222 a month to about $3,100. That saves $121 a month.

Assume $350 to discharge, $300 to apply and $333 in state fees, or $983 all up. Divide the costs by the monthly saving and you get the break-even month. Here that is 983 over 121, which is just over eight months. Keep the loan past month nine and every month after is profit. Sell or switch again within the year and the move ran at a loss.

What a cashback is worth

Banks pay cash to switchers from time to time, and the money is real. A decent cashback can cover every cost above on day one, which is why the offers work. The catch is the rate that comes with it.

On the same illustrative loan, a rate just 0.10 percentage points higher costs about $30 a month. At that pace a $2,000 cashback is gone in about five and a half years. A cashback stapled to the sharpest rate on your list is a clean win. A cashback stapled to a middling rate is a loan that pays you now and charges you later.

Who runs the numbers

Brokers settled 81.0 per cent of new residential home loans in the March 2026 quarter, a record, so most people refinancing already have someone to do this arithmetic. A broker can pull payout figures and model the break-even before anything is signed. It also costs nothing to ring your current lender first and ask for a sharper rate. Sometimes the threat of leaving does the work of leaving.

Seek Mortgages is an independent publication, not a lender or a broker, so read the figures here as a map rather than a quote. Whether a refinance suits your position depends on details no article can see, and that call belongs with a licensed broker or adviser.

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