"Should I refinance?" gets asked a lot — and the honest answer is: sometimes it's a no-brainer, and sometimes it's effort for little reward. The trick is knowing which one you're looking at before you start. Here's the checklist I run through with clients.
1. Is there a real rate gap?
If your rate starts with a high number and you haven't reviewed it in 12+ months, there's a good chance you're paying a "loyalty tax" — existing customers often quietly drift onto higher rates than new ones. Even a 0.3-0.5% difference on a sizeable loan is real money each month. Sometimes the win isn't even switching banks — it's getting your current lender to match a sharper rate.
2. Do the savings beat the costs?
Refinancing isn't free. Count the switching costs:
- Discharge fee from your current lender
- Possible application/settlement fees with the new lender
- A government mortgage registration fee
- Break costs if you're mid fixed-term
As a rough guide: if the switch pays for those costs within about 12-18 months and keeps saving after that, it's usually worth a serious look.
3. Beware the cashback trap
Cashback offers ($2,000-$4,000) are tempting, but a loan with a big cashback and a higher ongoing rate can cost you more over a few years than a no-cashback loan with a lower rate. Compare the long-run cost, not the upfront cash.
Refinancing should be about your total position over time — not the shiniest headline offer. The rate you keep for years matters more than the cash you get once.
Good reasons to refinance beyond rate
- Unlock equity for a renovation or next purchase
- Consolidate debt into one lower-rate facility
- Get features you don't have — a proper offset account, better app, flexibility
- Move off an expiring fixed rate before it rolls to a higher revert rate
Quick gut-check
Rate unreviewed 12+ months? Sitting in the high 6s or starting with a 7? Want equity or features you don't have? Any "yes" means it's worth getting it checked.
The honest review
I'll benchmark your current loan against 40+ lenders, count every switching cost, and tell you plainly whether it's worth it — including "no, stay put" if that's the truth. Try the repayments calculator to see what a lower rate does to your repayment.