How Much Can I Realistically Save by Refinancing?
The rate cut is worth one number. The decision you make about the term is worth roughly three times more. Almost every refinance conversation gets those two the wrong way round.
The short answer
Far less than the rate difference suggests if you reset the term, and considerably more than it suggests if you do not. On the illustrative loan used below, a balance of $600,000 with 25 years remaining and an assumed reduction from 6.00% to 5.50% per annum, the rate reduction on its own is worth about $54,400 in interest over the remaining term. Written back over a fresh 30 year term it costs about $66,700 more than never refinancing. Refinanced while keeping the old repayment amount, it saves about $109,300 and clears the loan roughly 28 months early. The rate cut is worth $54,400. The decision about the term moves the outcome across a range of about $176,000. Switching costs are usually recovered in under a year, which is why costs are rarely the deciding factor.
The question the calculators skip
Type your loan into any refinance calculator and it does one thing. It subtracts the new repayment from the old, multiplies by the months left, and shows you a large number. The number is real. It is also answering a question nobody actually has.
What people want to know is whether they will be better off. That depends on four things, and the rate is only the first: the size of the reduction, what switching costs, how long the loan runs after the switch, and what you do with the money the reduction frees up. The third and fourth are decisions made at settlement, usually in about ninety seconds, usually without anyone pointing out what is at stake.
A refinance calculator tells you what the rate is worth. It does not tell you what the paperwork is about to do to you.
Why people carry a rate they would not accept today
Worth naming the underlying pattern, because it is documented rather than anecdotal. When the ACCC reported on home loan pricing in December 2020, it found borrowers with loans between three and five years old were paying on average about 58 basis points more than the average rate on new loans, and borrowers with loans more than ten years old about 104 basis points more.
That is 2020 data gathered under different conditions, and we are not presenting it as a statement about current pricing. What it establishes is the structural point: the gap between what existing borrowers pay and what new borrowers pay is a documented feature of the market rather than a broker’s talking point. Whether it applies to your loan is an empirical question about your loan.
The illustrative loan, and what the rate cut is worth
Assumptions, all illustrative. Balance of $600,000. Twenty five years remaining. Principal and interest, monthly repayments. An assumed rate of 6.00% per annum before the switch and 5.50% after, both held constant. No offset, no extra repayments, no rate changes. Round numbers chosen for clarity, not observed market rates, and no lender is being described.
| Stay put | Refinance, 25 years kept | |
|---|---|---|
| Assumed rate | 6.00% p.a. | 5.50% p.a. |
| Monthly repayment | $3,866 | $3,685 |
| Monthly reduction | $181 | |
| Total repaid over 25 years | $1,159,700 | $1,105,400 |
| Difference | $54,400 |
So the honest headline is that half a percentage point on this loan is worth roughly $54,400, about $181 a month, about $2,175 a year. Those are the numbers a calculator gives you, and for once the calculator is right, on the condition that nothing else changes. That condition is doing a great deal of work.
What switching actually costs
Two categories. One is published and fixed. The other is not published anywhere and has to be asked for.
The government component, which you can look up
In New South Wales the land registry fees are set and public. NSW Land Registry Services publishes a fee of $166.60 for a discharge of mortgage and $166.60 for registering a mortgage, effective 1 July 2026. An ordinary refinance involves both, because the outgoing lender’s mortgage is discharged and the incoming lender’s registered. That is $333.20 in registry fees, and it does not vary with the size of your loan.
What you do not pay in NSW. Mortgage duty was abolished on and from 1 July 2016 under section 203A of the Duties Act 1997 (NSW), so a straightforward NSW refinance does not attract mortgage duty. This matters because national guidance reasonably lists stamp duty among the costs of switching, and duty is state based. Duty can still arise on other things, a transfer of title being the obvious one. Your solicitor or conveyancer, or the revenue office in your state, is the right place to confirm your own position.
The lender component, which you have to ask for
ASIC’s Moneysmart guidance on switching home loans lists the costs to check: a break fee if you are leaving a fixed rate, a discharge or termination fee from your current lender, an application fee on the new loan, a switching fee if you are moving internally, and lenders mortgage insurance if you have less than 20 per cent equity.
We are not going to publish figures for any of these, because they vary by lender and change without notice, and an invented number would be worse than none. What we can tell you is the shape: registry fees are small and fixed, lender fees are usually in the hundreds, and two items can be large enough to change the answer entirely.
- A fixed rate break cost. Not a fee in the ordinary sense. It is a calculation based on the lender’s funding position and the remaining fixed term, it can run into thousands, and there is no way to estimate it from outside. If you are in a fixed period, ask your lender for the figure in writing before you do anything else. It is the first question, not a detail.
- Lenders mortgage insurance. If your equity is under 20 per cent you may face LMI again on the new loan, and LMI paid on one loan is not transferable to another. On a large balance this can dwarf every other cost combined, and it is the most common reason a refinance that looks obviously worthwhile is not.
The break-even, done properly
Total switching cost, divided by the monthly reduction, gives the months before you are in front.
| Total switching cost | Months to break even |
|---|---|
| $333, registry fees only | Under 2 months |
| $500 | About 3 months |
| $1,000 | About 5.5 months |
| $1,500 | About 8 months |
| $2,000 | About 11 months |
Which tells you something useful and slightly deflating. In an ordinary refinance without a break cost or fresh LMI, the costs are recovered inside a year and often inside six months. Cost is almost never the reason a refinance is not worth doing.
That has a corollary worth sitting with. If switching costs are recovered in eight months, the entire debate about fees, which is where most of the conversation goes, is a debate about eight months of a twenty five year loan. Meanwhile the decision made in the same meeting about the loan term, which nobody discusses, is worth what follows.
Want this run on your actual loan?
Bring your balance, your rate, your remaining term and whether you are fixed. We will work the same calculation on your numbers, including the term comparison, and tell you the honest answer, including when the honest answer is that switching is not worth it. No obligation, and no fee at any point.
The same rate cut, three ways
Here is the part the calculators do not model, on the same loan, with the same rate reduction, changing only one thing.
| What you do | Monthly repayment | Total repaid | Versus staying put |
|---|---|---|---|
| Stay at 6.00%, 25 years left | $3,866 | $1,159,700 | |
| Refinance to 5.50%, written back over 30 years | $3,407 | $1,226,400 | $66,700 worse |
| Refinance to 5.50%, term kept at 25 years | $3,685 | $1,105,400 | $54,400 better |
| Refinance to 5.50%, keep paying $3,866 | $3,866 | $1,050,500 | $109,300 better, and finished about 28 months early |
Read the second row again, because it is the one that catches people. The rate went down. The monthly repayment went down by $459, which is more than twice what the rate reduction alone delivers. Everything about the transaction feels like a win. And the loan costs about $66,700 more than doing nothing at all, because five extra years of interest is a larger number than half a percentage point.
A lower repayment and a lower cost are different things. The refinance that feels best is frequently the one that costs most, and it feels best precisely because it costs most.
The spread between the worst version of this refinance and the best is about $176,000. The rate reduction itself is worth $54,400. So the decision nobody discusses is worth roughly three times the decision everybody argues about, and it is made by default, in the loan documents, by whoever fills in the term field.
Why the term resets in the first place
Not through anything sinister. A new loan is a new loan, and 30 years is the standard term, so unless someone specifies otherwise that is frequently what gets written. The borrower sees a lower repayment and reads it as the refinance working. The paperwork is correct. Nobody has done anything wrong. The outcome is still the second row of that table.
You can generally ask for the new loan to be written over your remaining term rather than a fresh full term, and the time to ask is before documents are issued. If the remaining term is not available, the fallback is the fourth row: take the new loan, then set your repayment back to what you were paying. Most lenders allow paying above the minimum on a variable loan, though conditions differ and fixed loans commonly cap extra repayments.
We have written separately about what a term reset does to a loan in what happens when you end up in the wrong loan, which works through a different scenario with the same underlying mechanism.
The saving you may not be able to reach
A calculated saving is not an available saving. Three things stand between the number and the money.
Serviceability assessment. Lenders do not assess you at the rate you will pay. They assess at a higher rate to test whether you could still afford the loan if rates rose. APRA raised the minimum buffer from 2.5 to 3.0 percentage points in October 2021, and confirmed on 28 May 2026 that it remains at three percentage points. The practical consequence is uncomfortable: a loan you have demonstrably been paying on time for years can fail an assessment at a rate several points above it, especially if your costs, income or circumstances have changed since it was written.
APRA addressed this directly in a letter to banks dated 9 June 2023, noting that borrowers seeking to refinance with another lender may no longer meet standard criteria and may not pass the buffer, and that banks can use exceptions to policy where these are managed prudently and kept limited, with past repayment behaviour as one relevant indicator. Two things follow. Exceptions exist. They are discretionary, deliberately limited, and nothing any broker can promise you.
Equity. If your balance is high relative to what the property is now worth, you may face lenders mortgage insurance on the new loan, and the valuation the new lender obtains is theirs rather than yours. Valuers are lender-appointed and work to their own standards. No broker can influence, guarantee or predict a valuation outcome.
A fixed rate you are still inside. The break cost is calculated by the lender, is not a fixed fee, and can be large enough to make an otherwise sensible switch pointless. Get the figure before you plan around it.
The order to do this in. Find out what you can qualify for before you work out what you would save. A saving you cannot access is not a saving, and the sequence most people use, calculating first and applying second, produces the disappointment. Our refinancing page covers the process, and how long approval takes covers the timing.
Savings that have nothing to do with the rate
Structure. An offset account used properly, the removal of an ongoing package fee you are not getting value from, or splitting a loan so extra repayments actually reduce interest rather than sitting idle. None of these show up in a rate comparison, and on some files they are worth more than the rate difference.
Term shortening, deliberately. The fourth row of the table above is not a trick. It is what happens when a rate reduction is taken as a shorter loan instead of a smaller payment. It costs nothing in monthly cashflow, because you were already paying that amount, and on the illustrative loan it is worth about twice the rate reduction on its own.
Consolidation, with a warning attached. Rolling other debts into a home loan reduces monthly outgoings almost every time, because it moves short term debt onto a long term schedule. Whether it reduces what you pay in total is a different question, and often the answer is no: a debt spread across the remaining life of a mortgage can accumulate more interest than the same debt cleared over a few years at a higher rate. It also converts unsecured debt into debt secured against your home, which is a real change in risk rather than a technicality.
Judge consolidation on total cost and on the security, never on the monthly figure. There are situations where it is clearly right, usually where the alternative is genuinely unaffordable, and situations where it quietly costs a great deal. If debt is causing you difficulty, free and independent financial counselling is available through the National Debt Helpline on 1800 007 007.
Run this on your own loan
- Get four numbers. Current balance, current rate, years remaining, and whether any part is fixed. All four are on your last statement or in your banking app.
- Work out the monthly reduction. Use ASIC’s Moneysmart mortgage calculator, which is free, independent and does not want your contact details. Run your balance over your remaining term at both rates.
- Get the real cost. Ask your current lender for the discharge fee and, if you are fixed, the break cost, both in writing. Add the registry fees. Ask the prospective lender what they charge to establish the loan.
- Divide. Cost divided by monthly reduction is your break-even in months. If it is under a year, cost is not your issue and you can stop thinking about it.
- Then decide the term, on purpose. Run the new rate over the remaining term, over 30 years, and at your current repayment. Those three answers are the three rows of the table above, on your loan. That comparison is the actual decision.
If you do only step five, you will have extracted most of the value of this article.
How Intellect Finance can help
The useful part of a refinance conversation is not producing a number. It is working out whether the saving is reachable given how you would assess today, what the switch actually costs on your file including the two items that can make it pointless, and what the loan should be written over so the transaction does what you think it is doing.
We will also tell you when the answer is to stay where you are, which is a common outcome and not a failure. Best Interests Duty applies to a home loan for a property you will live in, so we are required to act in your interests and prioritise them over ours. We charge you nothing, on any loan type, with no arrangement fee and no clawback recovery fee. Our Credit Guide, which sets out how we are remunerated, is provided before we give credit assistance. Australian Credit Licence 390611, members of the MFAA and AFCA, Penrith based since 2005.
What we do not do is advise on your tax position or on whether to invest money freed up by a lower repayment. Those are questions for your accountant and for a licensed financial adviser respectively.
Read Intellect Finance’s Google reviews
Rather than telling you how we handle refinance conversations, here are Intellect Finance’s Google reviews, live from our Google Business Profile and unedited.
These reviews reflect other clients’ experiences. They are not a promise of any particular outcome for your loan, which will always depend on your circumstances and the lender’s assessment.
Frequently Asked
Refinance saving questions
The questions that decide whether the number on the calculator is real.
How much can I realistically save by refinancing?
It depends far more on what you do at settlement than on the size of the rate reduction. On the illustrative loan in this article, the rate reduction alone is worth about $54,400 across the remaining term. Reset the term back to 30 years and the same reduction produces about $66,700 more interest than never refinancing. Keep making the old repayment at the new rate and it produces about $109,300 less and clears the loan roughly 28 months early. Same rate cut, a range of about $176,000. Illustrative figures on assumed inputs, not a quote.
How long does it take to break even on refinancing costs?
Divide the total switching cost by the monthly reduction. On the illustrative loan the reduction is about $181 a month, so around $500 of costs breaks even in under three months, $1,000 in about five and a half, $1,500 in about eight and $2,000 in about eleven. The break-even is short in most ordinary cases, which is why cost is rarely the reason not to refinance. The real reasons are a fixed rate break cost, an equity shortfall triggering lenders mortgage insurance, or not qualifying at the new lender.
What does it cost to refinance a home loan in NSW?
The government registration component is published and fixed. NSW Land Registry Services lists $166.60 for a discharge of mortgage and $166.60 for registering a mortgage, effective 1 July 2026, and an ordinary refinance involves both. Lender charges vary and are not published in one place: a discharge fee from the outgoing lender, an application or settlement fee from the incoming one, and a break cost if you are exiting a fixed rate. Ask both lenders for their figures in writing before you commit.
Does refinancing reset my loan term?
It can, and unless you ask for something else it often does, because a new loan is commonly written over a fresh 30 year term. That is the single most expensive thing that happens in an ordinary refinance. On the illustrative loan, resetting 25 years back to 30 at a lower rate produces about $66,700 more total interest than staying put, while the repayment falls by more than twice what the rate reduction alone delivers. The repayment looks better and the loan costs more. Ask for the remaining term before documents are issued.
Do I pay stamp duty when I refinance in NSW?
Mortgage duty in New South Wales was abolished on and from 1 July 2016 under section 203A of the Duties Act 1997, so a refinance in NSW does not attract mortgage duty. Registration fees still apply, and duty can arise on other dealings, for example a transfer of title where ownership is changing. Duty is state based and differs between states and territories. Confirm your position with your solicitor or conveyancer, or the revenue office in your state.
Can I be refused a refinance even though the new repayment is lower?
Yes, and it is one of the more common frustrations. Lenders assess your ability to repay at a rate above the actual rate. APRA’s serviceability buffer has been three percentage points since 2021 and APRA confirmed on 28 May 2026 that it remains there. So a loan you are demonstrably paying today can fail an assessment at a rate several points higher. APRA wrote to banks in June 2023 noting that refinancers may not pass the buffer and that banks can use exceptions where these are managed prudently and kept limited. Exceptions are discretionary and not something any broker can promise.
Is a 0.25% rate difference worth refinancing for?
On the illustrative loan a reduction of 0.25 percentage points is worth about $91 a month, so $1,500 of switching costs would take roughly 16 months to recover. Whether that is worth doing depends on how long you expect to hold the loan and what else changes at the same time. A small margin on its own is usually not the reason to move. A small margin combined with a structure that suits you better, or with keeping your existing repayment so the term shortens, can be.
Should I refinance to consolidate other debts into my home loan?
Consolidation almost always reduces monthly outgoings, because it moves short term debt onto a long term schedule. Whether it reduces what you pay in total is a separate question, and often the answer is no, because a debt repaid over the remaining life of a mortgage can accumulate more interest than the same debt cleared over a few years at a higher rate. It also converts unsecured debt into debt secured against your home. Assess it on total cost and on the security, not on the monthly figure. If debt is causing difficulty, the National Debt Helpline is free on 1800 007 007.
The honest bottom line
Refinancing is worth what the rate reduction is worth, minus costs you will usually recover inside a year, plus or minus a much larger number that depends on a decision made in the loan documents.
On the illustrative loan here, the rate reduction is worth about $54,400 and the term decision moves the outcome across a range of about $176,000. If you take one thing from this page, take that ratio, because it is the thing the industry does not put on the front of the calculator.
And a saving you cannot qualify for is not a saving. Find out whether you can move before you work out what moving is worth, not the other way round.
Joseph Sukkar
Joe founded Intellect Finance in Penrith in 2005 and has more than 25 years in Australian finance, across several full interest rate cycles. The firm does not recommend transactions that do not need to happen, and tells clients when staying put is the better answer. Intellect Finance holds a credit licence, is not a registered tax agent, and charges clients no fee on any loan type. More about the team.
Sources
NSW Land Registry Services, fees and payments schedule for 2026/27, effective 1 July 2026, for the discharge and registration fees. nswlrs.com.au
NSW Legislation, Duties Act 1997 (NSW) section 203A, for the abolition of mortgage duty on and from 1 July 2016. legislation.nsw.gov.au
ASIC Moneysmart, Switching home loans, for the costs to check before switching, and the mortgage calculator. moneysmart.gov.au
Australian Prudential Regulation Authority, the October 2021 increase in the serviceability buffer, the statement of 28 May 2026 maintaining it at three percentage points, and the letter to banks of 9 June 2023 on exceptions to policy for refinancing borrowers. apra.gov.au
Australian Competition and Consumer Commission, Home Loan Price Inquiry final report media release, December 2020, for the documented gap between rates paid on older and newer loans. Historical research, not a statement about current pricing. accc.gov.au
Important disclosures, general advice warning and licensing
General information only. This article is general information only and does not constitute financial, credit, legal, investment or tax advice. It does not take your objectives, financial situation or needs into account, and it is not a recommendation to refinance, to stay with your current lender, or to enter into any credit contract. Before acting on any information here you should obtain advice from appropriately qualified professionals.
All figures on this page are illustrative. The worked example uses assumed round numbers chosen so the arithmetic is easy to follow: a balance of $600,000, 25 years remaining, principal and interest, and assumed rates of 6.00% and 5.50% per annum held constant throughout. Those rates are modelling inputs. They are not quotes, not offers, not a claim about any lender’s pricing, and not a prediction of future interest rates. Real loans have rate changes, offset accounts, extra repayments, fees and redraw activity that this illustration excludes. Substitute your own numbers before drawing any conclusion.
No rate claims and no comparisons between lenders. This page publishes no interest rates, comparison rates or pricing comparisons between lenders, and names no lenders. Any rate should be confirmed in writing against an actual offer. The ACCC figures cited are from a December 2020 report, are reproduced with attribution as historical research about the market as it then stood, and are not a statement about current pricing or about what would be available to you now.
Government fees. The registry fees quoted are as published by NSW Land Registry Services in its 2026/27 fee schedule, effective 1 July 2026, and are stated as published. Fees change, apply to New South Wales, and differ in other states and territories. Confirm the current figures directly.
Duty. The statement about NSW mortgage duty reflects section 203A of the Duties Act 1997 (NSW). Duty is state based, other duties can apply to other dealings, and duty questions belong to your solicitor or conveyancer or to the revenue office in your state.
Approval is never guaranteed. All lending is subject to lender assessment, credit criteria, valuation and lender policy, which vary between lenders and change without notice. No broker can guarantee approval, a particular rate, a particular structure, an exception to policy, a valuation outcome or a timeframe. The APRA material cited describes prudential expectations on lenders and does not create any entitlement for any borrower.
Debt consolidation. Consolidating debts into a home loan usually lowers monthly repayments and can increase the total amount you pay over the life of the loan, and it converts unsecured debt into debt secured against your home. It should be assessed on total cost and on the change in security. If you are experiencing financial difficulty, free and independent financial counselling is available through the National Debt Helpline on 1800 007 007.
Other professionals. Tax treatment to your accountant or registered tax agent. Contracts, duty and title to your solicitor or conveyancer. Investment of any funds freed up by a lower repayment to a licensed financial adviser. Intellect Finance holds a credit licence and does not provide financial product advice.
Best Interests Duty. A home loan for a property you will live in is regulated consumer credit under the National Consumer Credit Protection Act 2009, and Best Interests Duty applies. It does not apply to business or commercial lending.
What we charge you. Nothing, on any loan type. No arrangement fee for residential, commercial, corporate, asset, SMSF or personal lending, no fee for complex or specialist lending, and no clawback recovery fee if a loan is discharged early. Our remuneration is the commission paid by the lender after settlement, disclosed in our Credit Guide, which is provided before we give credit assistance.
About the reviews shown. The reviews displayed on this page are genuine reviews published by clients on Intellect Finance’s Google Business Profile, shown live via a third-party reviews widget. They reflect those individuals’ own experiences and are not a promise of any particular outcome.
Intellect Finance Pty Ltd holds Australian Credit Licence 390611 and is a member of the MFAA and AFCA. Lending criteria, fees and terms apply. Article checked 7 September 2026.
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Free Refinance Check
We will tell you when staying put is the right answer.
Bring your balance, your rate, your remaining term and whether any part is fixed. We will run the same calculation on your loan, including the term comparison, and give you the honest number. If the answer is that switching is not worth it, that is what you will hear. Owner-operated, Penrith based since 2005, clients Australia-wide. No fee on any loan type. ACL 390611.
If debt is causing you difficulty, free and independent financial counselling is available through the National Debt Helpline on 1800 007 007.
General information only, not financial or tax advice. All figures illustrative. No broker can guarantee approval, a rate, an exception to policy or a valuation outcome.
Intellect Finance Pty Ltd | Australian Credit Licence 390611 | MFAA Member | AFCA Member