Do you know what refinancing actually costs?

What Does It Cost to Refinance Your Home Loan?

Refinancing typically costs between $500 and $1,500 in upfront fees, though some lenders waive application fees to attract new borrowers. The actual cost depends on whether you need a new property valuation, whether your lender charges discharge fees, and what application or settlement fees your new lender applies.

Many homeowners in Werribee look at refinancing when their fixed rate period ends or when they spot a lower rate elsewhere. The question they usually forget to ask is whether the savings outweigh the cost of switching.

Consider someone with a $450,000 mortgage who finds a rate that's 0.5% lower than their current loan. Over a year, that's roughly $2,250 in interest saved. If refinancing costs $1,200, they're still $1,050 ahead by the end of year one. But if the rate difference is only 0.2%, the savings shrink to around $900 annually, and the switch might not pay off until year two.

Discharge Fees From Your Current Lender

Your existing lender will charge a discharge fee to close your loan and remove their mortgage from the property title. This fee typically ranges from $150 to $400, depending on the lender. Some banks also charge a separate government fee to process the discharge with the land titles office, which in Victoria is around $120.

If you're coming off a fixed rate and your fixed term has already ended, you won't face break costs. But if you're exiting a fixed loan early, the break cost can run into thousands of dollars. That's a separate calculation based on wholesale interest rate movements and the time remaining on your fixed term.

Application and Valuation Fees With the New Lender

Most lenders charge an application fee, though many will waive it during promotional periods or as part of a refinance offer. When an application fee does apply, it's typically between $200 and $600.

A property valuation is almost always required when you refinance. Some lenders include a free valuation as part of the refinance package, while others charge between $200 and $400. In Werribee, where property types range from established homes near Watton Street through to newer estates around Wyndham Vale, the valuation method varies. Desktop valuations are common for straightforward properties, while older or unusual homes may require a physical inspection, which costs more.

Settlement and Legal Costs

You'll need to pay for settlement when the new loan is registered. Settlement fees are usually between $200 and $300, and you may also need to cover the cost of a solicitor or conveyancer if the lender requires one. Some lenders include settlement in their package, but most don't.

Government registration fees also apply when your new lender registers their mortgage on the title. In Victoria, this fee is currently around $120. These charges are unavoidable, regardless of which lender you choose.

Ongoing Account Fees After You Refinance

Once the loan settles, you'll pay whatever ongoing fees your new lender charges. Monthly account fees typically range from $0 to $15 per month, depending on the loan type. Some loans have no monthly fee but charge higher interest rates. Others bundle in features like an offset account or redraw facility and charge a monthly fee to cover those.

If you're refinancing to access equity or consolidate debt, the loan amount increases, which means higher interest costs even if the rate is lower. A loan health check before you refinance helps you understand whether increasing your loan amount makes sense given your current income and spending.

When Refinancing Costs More Than It Saves

Refinancing doesn't always deliver a financial win. If the rate difference is small, if you're planning to sell within the next couple of years, or if your current loan already has the features you need, the cost of switching can outweigh the benefit.

In our experience, homeowners who refinance within two years of taking out their original loan often underestimate the impact of upfront costs. A $1,200 refinance cost on a loan with a 0.3% rate advantage might take 18 months to recover. If you sell or refinance again before that point, you've paid to switch without gaining the benefit.

Another scenario: someone refinancing to access equity for an investment property. If the upfront cost is $1,500 and they're borrowing an additional $50,000, the question becomes whether the rental income or capital growth justifies both the refinance cost and the increased loan balance. The equity release itself isn't the issue, but the timing and structure matter.

How to Work Out if the Numbers Stack Up

Start with the interest rate difference. Multiply your loan amount by the rate reduction, then divide by 100 to get the annual saving. If your loan is $400,000 and the rate is 0.4% lower, that's $1,600 saved per year.

Next, add up the refinance costs: discharge fee, application fee, valuation, settlement, and any other charges your new lender lists. If the total is $1,000, you'll recover that cost in around seven months. If it's $2,000, you'll break even after 15 months.

If you're also switching loan features, such as adding an offset account or moving from a fixed to a variable loan, factor in the value of those changes. An offset account can save more in interest than the rate difference alone, particularly if you keep a decent balance in it. But if your new loan has a higher monthly fee, subtract that from your annual saving.

You don't need a spreadsheet to do this. Just check whether the annual saving is at least double the upfront cost. If it is, refinancing usually makes sense. If it's not, you're cutting it close.

What CV Lending Services Covers When You Refinance

We don't charge broker fees when you refinance through us. The lender pays our commission, so the costs you're covering are the ones the banks and government agencies charge directly.

We'll also tell you upfront which lenders are waiving application fees or offering free valuations, and we'll walk through the total cost before you commit to anything. If refinancing doesn't improve your position, we'll say so. There's no benefit to switching loans if the numbers don't work, and we'd rather you stay where you are than pay to move sideways.

If you're weighing up a refinance or just want someone to check whether your current loan still fits your situation, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions