Refinancing is arithmetic. Either the saving beats the cost within a period you are comfortable with, or it does not, and the whole decision turns on a calculation most borrowers never run.
The obstacle is that the costs are scattered. A discharge fee from the outgoing lender, an application or valuation fee at the new one, and a government registration charge, none of which appear in the advertised rate comparison.
This guide sets out every cost line, explains why existing customers reliably pay more than new ones, shows how to run the break-even yourself, and covers what the discharge process involves in New South Wales.
Six charges can apply. Not all of them will, and knowing which ones apply to you is the first step.
| Cost | Charged by | When it applies |
|---|---|---|
| Discharge or settlement fee | Outgoing lender | Almost always |
| Fixed rate break cost | Outgoing lender | Only if you are inside a fixed term |
| Application or establishment fee | New lender | Often waived in a competitive market |
| Valuation fee | New lender | Often absorbed by the lender |
| Mortgage registration and discharge | NSW Land Registry Services | Always |
| Lenders mortgage insurance | New lender’s insurer | Only if the new loan exceeds 80% of the value |
The last row is the one that quietly kills refinances. Insurance already paid to your current lender is not transferable. If your equity has not grown past twenty per cent, switching can mean paying a second premium, which usually outweighs any rate saving.
Break costs on a fixed loan are not a fee in the ordinary sense. They are a calculation based on the movement in wholesale rates since you fixed, and they can be either trivial or very large. Ask for the figure in writing before you do anything else.
Lenders price new business and existing business differently. The industry calls these the front book and the back book, and the gap between them is the entire reason refinancing works.
Acquiring a customer costs money, so new lending is discounted to win it. Once you are on the books, the discount is not automatically maintained, and the rate drifts upward relative to what the same lender is offering someone new that week.
Movements in the cash rate flow into variable rates but do not close the front book gap, because both books move together. Background on that in how the RBA cash rate affects home loans.
The refinance break even calculation nsw borrowers need is three numbers, not a spreadsheet.
Add every cost that applies to you. Work out the monthly repayment difference between the current rate and the new one. Divide the first by the second. The answer is the number of months before you are ahead.
One correction most people miss. If you keep the same end date rather than restarting a thirty-year term, the comparison is honest. Restarting the term lowers the repayment by stretching the loan, which looks like a saving and is not one. Compare like with like.
ASIC sets out the same method independently in its guidance on switching home loans.
The refinance savings calculator does the arithmetic, and whether refinancing is worth it works through the judgement around it.
Discharge is the bottleneck in every refinance. Everything else can be fast.
Not the rate you were given at settlement. The rate on your most recent statement, which may have moved since.
Call retention and ask what they can do. If they match the market, you are finished, at no cost.
It changes daily. A quote from three weeks ago is not the figure you will pay.
If the new loan would exceed eighty per cent of current value, insurance applies again. Establish this before you apply, not after the valuation.
Costs divided by monthly saving. Decide using that number rather than the rate difference alone.
Identification, income evidence, current loan statements, rates notice, and statements for any other debts. The list is in documents required for refinancing.
The new lender orders a valuation. A result below expectation changes the loan-to-value ratio and can change the pricing offered.
You lodge a discharge authority with the outgoing lender. The mortgage discharge process nsw lenders follow commonly takes two to four weeks, and it is almost always the slowest part. Lodge it as soon as the new loan is approved rather than waiting for settlement to be booked.
Illustrative only. The point is the method, not the numbers, which will differ for every borrower and every lender.
| Line | Amount |
|---|---|
| Loan balance | $650,000 |
| Discharge fee | $350 |
| Registration and discharge, NSW | $340 |
| New lender application fee | Waived |
| Valuation | Absorbed by lender |
| Total switching cost | $690 |
| Rate reduction achieved | 0.45% |
| Approximate monthly saving | $185 |
| Break-even | Under 4 months |
Four months is comfortably inside the threshold, so this refinance is worth doing. Change one variable and it is not. Add a $9,000 fixed rate break cost and the break-even moves past four years, at which point the answer is to wait until the fixed term ends.
The first call should always be to your own lender. Roughly a third of the time they will match the market, and you have saved yourself six weeks of paperwork for the price of a phone call.
Paritosh Wadhwani, Director and Principal Broker, APW Finance
Four to eight weeks is typical from application to settlement. Approval at the new lender can be quick, often one to two weeks, but the discharge at your existing lender commonly takes a further two to four weeks and is the usual bottleneck. Lodging the discharge authority as soon as the new loan is approved, rather than waiting, is the single best way to shorten it.
Usually between $500 and $1,500 where no fixed rate is involved, made up of a discharge fee, government registration charges and sometimes an application or valuation fee. Breaking a fixed rate can add thousands depending on how wholesale rates have moved since you fixed. If the new loan would exceed eighty per cent of the property value, mortgage insurance may apply again and is not transferable.
A refinance application creates a credit enquiry, which is recorded and has a modest short-term effect. One enquiry is unremarkable. Several within a short period look like credit-seeking behaviour and can concern assessors, which is why applying to multiple lenders simultaneously is a poor strategy. Apply once, to the lender whose policy actually fits your situation.
It depends on your remaining equity. If the new loan would sit above eighty per cent of the current valuation, mortgage insurance becomes payable again, and above ninety-five per cent most lenders will decline. Order an indicative valuation before applying so you are not surprised. If equity is too thin, repricing with your existing lender is usually the better route.
Ask first, because it costs nothing and often works. Lenders price new business more sharply than existing business, and a retention team can frequently close part of that gap on request. If they reprice to within a reasonable margin of the market, staying is simpler. If they will not move, you now have a concrete figure to compare against.
Run the break-even rather than judging by the rate gap. Divide your total switching costs by the monthly saving to get the number of months before you are ahead. Under a year is a clear case. Beyond two years rarely justifies it. A small difference on a large balance can still break even quickly, so the balance matters as much as the margin.
Refinancing is worth doing when the break-even is short and you intend to keep the property. It is not worth doing because a rate looks lower in an advertisement.
Call your own lender first. If they will not move, run the numbers properly and start the discharge early.
Read more about refinancing with a broker or releasing equity at the same time. You can also compare fixed against variable, check whether cashback offers stack up, or read about offset accounts and redraw.
Ask us to run your break-even.
Paritosh Wadhwani | Director and Principal Broker, APW Finance
Member of the Finance Brokers Association of Australia (FBAA). Arranging residential, commercial and specialist lending for Sydney clients across a panel of more than 50 lenders.
APW Finance Pty Ltd, 304/20a Lexington Drive, Bella Vista NSW 2153. Email: info@apwfinance.com. Phone: +61 447 959 546.
ACN 620 646 479 | ABN 79 620 646 479
This guide is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial or credit advice. Lending criteria, interest rates, duty thresholds and government schemes change, and every application is subject to lender approval. Consider whether this information suits your circumstances and seek independent advice before acting. Figures quoted are current at the date below and should be confirmed before you rely on them. Last reviewed: October 2026.
APW Finance Pty Ltd delivers expert lending solutions with personalised service, empowering clients across residential, commercial, and business sectors.