What does refinancing actually cost?

Published 10 August 2026 · DeMarque Home Loans

The rate gets all the attention, but refinancing has an entry price. The good news: it’s usually smaller than people expect, and the break-even maths is simple.

Here’s what changing lenders typically involves.

The usual costs

• Discharge fee — your current lender’s fee for closing the loan, commonly a few hundred dollars.
• Application or settlement fees — some new lenders charge them, many waive them to win your business.
• Government fees — mortgage registration and discharge, charged per state or territory, typically a few hundred dollars combined.
• Valuation — often covered by the new lender, worth confirming.

For many straightforward switches the all-in cost lands in the range of roughly $700–$1,500. Your numbers depend on your state and both lenders’ fee schedules — we itemise them before you commit to anything.

The two costs that can actually bite

Fixed rate break costs. If you’re leaving a fixed loan early, break costs can range from trivial to thousands of dollars depending on how rates have moved since you fixed and how long remains. Always get the payout figure before deciding.

Lenders mortgage insurance (LMI). If your equity is under 20% of the property’s value, the new lender may require LMI — even if you paid it once already with your current lender. This is the single most common deal-breaker we see, and it’s why a valuation matters early. If this is you, our mortgage prisoner guide covers the alternatives.

The break-even that matters

Take the monthly saving from the new rate and divide it into the switching costs.

Worked example (as at 10 August 2026): on a $600,000 loan with 25 years remaining, moving from 6.92% to 5.99% saves about $348 a month. Against, say, $1,200 of switching costs, you’re ahead in under four months — and about $4,176 a year after that.

If the break-even is measured in months, the case is strong. If it’s measured in many years, keep your current loan and revisit later.

The refinance savings calculator does this arithmetic for you, break-even included.

One trap to avoid

A lower rate on a reset 30-year term can mean paying more interest overall, because you’re stretching the debt over more years. Keeping your remaining term (or matching your current payoff date with extra repayments) protects the saving.

Want the numbers done properly for your loan? Start with the free health check or get in touch.