Refinancing offers are everywhere, and a lower advertised rate is genuinely tempting. But the true cost of switching lenders includes more than the interest rate on the page, and it's worth checking these five things before you sign anything.
1. What will it cost to leave your current lender?
Fixed-rate loans often carry a break fee, calculated on how far current rates have moved since you fixed. Even variable loans can have a small discharge fee. Ask your current lender for an exact figure before comparing offers.
2. What will the new loan cost to set up?
Application fees, valuation fees, and settlement fees can add up to $1,000–$1,500 even on a competitive offer. Some lenders waive these as an incentive — worth asking about directly.
3. Has your equity position changed?
If property values have shifted or you've paid down more of the loan, your loan-to-value ratio at the new lender might be different from what it was originally, which can affect whether Lenders Mortgage Insurance applies again.
4. How long do you plan to stay in this loan?
If the combined exit and setup costs come to $2,000 and the new rate saves you $60 a month, it takes over two and a half years just to break even. If you expect to move or refinance again sooner than that, the switch may not be worth it.
5. Are you giving up any features you actually use?
A cheaper rate sometimes comes with a stripped-down loan — no offset account, no redraw, or a cap on extra repayments. If you rely on those features, weigh the rate saving against what you'd be giving up.
We run this comparison for every refinance client before recommending a switch, including the exact break-even timeline, so you're deciding on the full picture rather than the headline rate.