How much does refinancing typically cost?

Costs usually include a discharge fee from your current lender, possible application or valuation fees with the new lender, and sometimes government registration fees. These are often modest compared to the interest saved, but they should still be factored in.

Is there a rule of thumb for how big a rate gap makes refinancing worth it?

There is no fixed rule, since it depends on your loan balance and remaining term, but a noticeably lower rate on a large balance with several years left to run is usually where it starts to make clear financial sense.

Does refinancing reset my loan term?

It can, if you refinance into a new 30-year loan after already paying down several years of your current one. This can lower monthly repayments but may increase total interest paid, so it is worth checking the new loan's term against your original one.

How long does refinancing usually take?

Often a few weeks from application to settlement with the new lender, though it can be faster or slower depending on the lender and how complete your documents are.

Is refinancing worth it? Working out the real savings

By Clara Kowalski · Updated 2026-07-05

Refinancing gets talked about as an obvious win whenever rates move, but whether it actually saves you money depends on the numbers, not just the headline rate difference. Here is how to work it out properly.

Start with the real rate gap

The comparison that matters is between your current rate and the realistic rate you would actually get, not just the lowest advertised rate you have seen somewhere. Advertised rates often apply to specific loan-to-value ratios or new-customer offers, so ask a broker to check what rate you would genuinely qualify for before doing any savings maths.

Account for the switching costs

Refinancing is not free. Typical costs include a discharge fee from your current lender, an application or valuation fee with the new one, and sometimes government registration charges. None of these are usually large individually, but they should be subtracted from your projected savings, not ignored.

Watch the loan term reset

If you refinance into a fresh 30-year loan after already paying down five or ten years of your original mortgage, your monthly repayment may drop, but you could end up paying more total interest over the life of the loan because you have effectively restarted the clock. Asking the new lender to match your remaining term, rather than defaulting to a fresh 30 years, avoids this trap if minimising total interest is your goal.

A homeowner comparing their current home loan rate against a refinance offer using a laptop and printed statements

A simple way to frame the decision

Question	What it tells you
What is the real rate gap, after accounting for my actual eligibility?	Sets the ceiling on possible savings
What do switching costs add up to?	Subtract this from the savings estimate
Does the new loan reset my remaining term?	Affects total interest, not just monthly repayment
How many years do I plan to keep this loan?	Short remaining time can make switching costs outweigh savings

Signs it is worth exploring

Refinancing tends to be worth a serious look when your current rate is noticeably above what you could realistically get elsewhere, your loan balance is still substantial, and you plan to stay in the property for several more years. It is also worth checking after a genuine change in your financial position, such as a pay rise or growth in your property’s value, since either can improve the rate or terms you qualify for.

Signs it is probably not worth it yet

If your loan balance is small, you are close to paying it off, or you plan to sell within the next year or two, switching costs can easily outweigh the savings. In these cases it is often better to simply ask your current lender for a rate review, which sometimes achieves a similar result without the switching costs.

Do not forget non-rate reasons to refinance

Rate is usually the headline reason, but it is not the only one. Some borrowers refinance to access features their current loan lacks, such as an offset account or more flexible redraw, to consolidate other debts into a lower-rate facility, or to release equity for a renovation or another purchase. Refinancing also comes up for less routine reasons, like untangling a joint loan after a separation or divorce. These reasons can justify refinancing even when the rate gap alone would not, so it is worth being clear about your actual motivation before running the numbers, since it changes what “worth it” means for your situation.

Talking to your current lender first

Before committing to a full refinance, a short conversation with your existing lender asking them to match or beat a competitive offer you have found elsewhere is worth having. Lenders are often willing to adjust your rate to retain you as a customer, particularly if you present a genuine competing offer, and this can achieve much of the savings without any of the switching costs or paperwork involved in moving to a new lender entirely.

This is general information about how refinancing decisions typically work and is not personal financial advice. Run the actual numbers for your loan balance, rate and remaining term before deciding, ideally with a broker who can access current rates across multiple lenders.

Comparing refinancing specialists is a sensible way to get a real read on your options, and our scoring method explains how we assess them if you want a starting point from the home page.

FAQ

How much does refinancing typically cost?: Costs usually include a discharge fee from your current lender, possible application or valuation fees with the new lender, and sometimes government registration fees. These are often modest compared to the interest saved, but they should still be factored in.
Is there a rule of thumb for how big a rate gap makes refinancing worth it?: There is no fixed rule, since it depends on your loan balance and remaining term, but a noticeably lower rate on a large balance with several years left to run is usually where it starts to make clear financial sense.
Does refinancing reset my loan term?: It can, if you refinance into a new 30-year loan after already paying down several years of your current one. This can lower monthly repayments but may increase total interest paid, so it is worth checking the new loan's term against your original one.
How long does refinancing usually take?: Often a few weeks from application to settlement with the new lender, though it can be faster or slower depending on the lender and how complete your documents are.