Do you know what refinancing actually costs?

What does it cost to refinance a home loan?

Refinancing typically costs between $500 and $3,000 in upfront fees, though some lenders waive application fees during promotional periods. The total depends on whether you stay with your current lender or switch to a new one, whether you're breaking a fixed rate, and what your new lender charges for establishment and valuation.

The most common costs include an application fee (usually $200 to $600), a property valuation fee (around $200 to $400), and settlement or discharge fees from your current lender (typically $150 to $400). If you're switching lenders, you may also pay for legal documentation and registration fees, which vary by state but generally sit between $100 and $300 in Queensland. Some lenders bundle these into a single package, while others itemise each charge separately.

Consider a borrower in Brisbane looking to switch from a variable rate to a fixed term before rates climb further. The new lender charges a $350 application fee and a $300 valuation fee. The existing lender adds a $250 discharge fee. Settlement costs come to $180. The total upfront outlay is $1,080 before the first repayment is made. If the new loan saves $150 per month in repayments, the break-even point arrives after seven months. Beyond that, the saving compounds.

Fixed rate break costs: how they're calculated

Break costs apply when you exit a fixed rate loan before the agreed term ends. The charge reflects the difference between the rate you locked in and the rate your lender can now earn by reinvesting the funds over the remaining fixed period.

Lenders calculate break costs using a formula that compares your fixed rate to the current wholesale rate for the remaining term. If rates have fallen since you fixed, the lender loses income by releasing you early, and that loss becomes your break cost. If rates have risen, the break cost is often zero because the lender can reinvest at a higher rate. The calculation also factors in your remaining loan balance and the number of months left on the fixed term.

In our experience, borrowers coming off a low fixed rate locked in during previous rate cycles face break costs ranging from a few hundred dollars to tens of thousands, depending on the loan size and remaining term. A $500,000 loan with two years remaining on a 2.5% fixed rate, when current rates sit closer to 6%, might attract a break cost of $20,000 or more. That figure alone can make refinancing unviable unless the new loan delivers substantial ongoing savings or unlocks equity for another purpose. If your fixed rate period is ending within the next six months, waiting until expiry often makes more financial sense than paying to exit early.

Discharge and settlement fees from your current lender

Your existing lender charges a discharge fee to process the paperwork required to release the mortgage over your property. This fee typically ranges from $150 to $400 and covers administrative costs, including notifying the relevant state land titles office that the mortgage has been satisfied.

Some lenders also charge a government registration fee to remove the mortgage from the title, which in Queensland usually sits around $150. This is separate from the discharge fee and reflects the cost of lodging documents with the Queensland Land Titles Registry. If you're refinancing an investment property or a loan with multiple securities, you may be charged per property rather than per loan.

Settlement fees apply when the new loan is finalised and funds are transferred to discharge the old loan. These are usually charged by the new lender or your solicitor and cover the cost of preparing and lodging documents. In Queensland, settlement costs are generally lower than in New South Wales or Victoria, but they still add $150 to $300 to the total.

When application fees are waived or refunded

Many lenders waive application fees during refinance campaigns, particularly when competing for borrowers with strong equity positions or high loan balances. Some offer cashback incentives that effectively refund the upfront costs, though these are typically paid several months after settlement and may require you to remain with the lender for a minimum period.

Cashback offers in Queensland usually range from $2,000 to $4,000 for loans above $250,000, though the terms vary. Some lenders pay the cashback in stages, others require you to stay for at least two years before the full amount is released. If you refinance your home loan again within that timeframe, you may be required to repay part or all of the cashback.

Application fee waivers are more common than cashback and are offered by both major banks and non-bank lenders. A waiver removes one line item from your upfront costs but does not eliminate valuation, discharge, or settlement fees. When comparing offers, focus on the total cost of switching rather than the individual fee being promoted. A lender offering a $4,000 cashback may also charge a higher ongoing rate, which erodes the benefit over time.

Valuation fees and when you can avoid them

Lenders require a property valuation to confirm the security value before approving a refinance application. Valuation fees typically cost between $200 and $400, depending on the property type and location. Some lenders waive this fee if you have strong equity or if the loan-to-value ratio is comfortably below 80%.

In suburbs across Brisbane and regional Queensland where property values have risen significantly in recent years, an updated valuation may increase your equity position and improve your borrowing capacity or loan terms. If you purchased in an area like Paddington or Ascot several years ago, the current valuation may reflect substantial capital growth, which can reduce or eliminate lender's mortgage insurance on the new loan if your loan-to-value ratio has dropped below 80%.

Some lenders use desktop valuations or automated valuation models instead of sending a physical valuer to the property. These are often provided at no cost and rely on recent sales data and property characteristics. A desktop valuation is faster and removes one upfront cost, but it may undervalue your property compared to a full valuation, particularly if you've renovated or if the property has unique features not reflected in comparable sales data.

Ongoing costs: comparison rate and annual fees

The comparison rate includes the advertised interest rate plus most ongoing fees, expressed as a single annual percentage. It provides a more accurate picture of what the loan will cost over time than the interest rate alone.

Some lenders charge annual package fees ranging from $300 to $400, which may include features like offset accounts, redraw facilities, or fee waivers on associated transaction accounts. Others charge monthly account-keeping fees of $10 to $15. When comparing loans, calculate the total annual cost of these fees and add them to your interest repayments. A loan with a slightly higher rate but no ongoing fees may cost less over the life of the loan than a lower rate with a $395 annual package fee.

If you're refinancing to access equity for an investment property purchase, ongoing fees can affect your cash flow and tax position. Annual package fees on investment loans are generally tax-deductible, while fees on owner-occupied loans are not. A loan health check every two to three years helps you determine whether your current loan structure still aligns with your financial position and whether refinancing would reduce your overall costs.

How long it takes and what that means for your costs

The refinance process typically takes three to six weeks from application to settlement, though timelines vary depending on lender workloads, valuation delays, and how quickly you provide supporting documents.

During this period, you continue making repayments to your current lender at the existing rate. If you're refinancing to access a lower rate, every additional week adds to the interest you pay at the higher rate. In a scenario where you're switching from a 6.5% variable rate to a 5.8% rate on a $400,000 loan, a four-week delay costs roughly $215 in additional interest compared to settling immediately.

Some lenders offer faster processing for straightforward applications with strong equity and clear income documentation. If you're self-employed or your income structure is complex, expect the process to take longer as the lender conducts additional verification. Delays in obtaining a property valuation can also extend the timeline, particularly in regional Queensland where valuers may have limited availability.

Is refinancing worth the upfront cost?

Refinancing makes financial sense when the ongoing saving exceeds the upfront cost within a reasonable timeframe, typically 12 to 24 months. If you're saving $200 per month on repayments and the total cost to switch is $1,500, you break even after eight months and save $1,900 over the first year.

The calculation changes if you're refinancing to access equity for another purpose, such as purchasing an investment property or funding renovations. In that case, the upfront costs are weighed against the benefit of accessing funds at a lower rate than alternatives like personal loans or credit cards, rather than purely against repayment savings.

If your current loan already offers a competitive rate and the features you need, refinancing may not deliver enough value to justify the cost and effort. A small rate difference of 0.1% to 0.2% typically saves less than $50 per month on a $400,000 loan, which may not cover the upfront fees within a reasonable period. However, if your loan lacks an offset account or redraw facility and you're regularly holding surplus cash in a savings account earning minimal interest, switching to a loan with an offset can deliver savings beyond the rate differential.

Call one of our team or book an appointment at a time that works for you to review your current loan structure, calculate the true cost of refinancing, and determine whether switching lenders will improve your financial position.

Frequently Asked Questions