Your home loan is probably your biggest expense, and it's the one most people never re-shop. Lenders count on that. This guide covers when refinancing genuinely pays, when it doesn't, and how to check without wasting a weekend.
Why do loyal customers pay more?
Lenders compete hard for new borrowers and quietly let existing rates drift. The gap — often called the loyalty tax — typically runs 0.3% to 0.8%, and RBA research has repeatedly found older loans carry higher average rates than new ones.
On a $550,000 balance, half a percent is about $2,700 a year. Not for better service. Just for not asking.
When is refinancing worth it?
Strong signs it's worth a look:
- Your rate is 0.3%+ above current advertised rates (check yours here)
- You haven't reviewed the loan in 2+ years
- Your fixed term is ending (the default "revert rate" is nearly always bad)
- Your home's value has risen and your equity has grown — better rates unlock at lower LVRs
- You want to consolidate debts or unlock equity for renovations or investing
- Your loan lacks features you now need (offset account, split, redraw)
And when it's usually not: you plan to sell within a year or two, your balance is small (savings shrink, fixed costs don't), or a large fixed-rate break cost eats the benefit — which is why we always get the exact break figure before recommending anything.
What does it actually cost to switch?
| Cost | Typical amount |
|---|---|
| Discharge fee (old lender) | $150–$400 |
| Government registration | $200–$350 |
| New lender application | Often $0 (frequently waived) |
| Fixed-rate break cost | $0 if variable; get an exact quote if fixed |
Many lenders pay cashbacks of $2,000–$4,000 to switchers. A cashback can be genuine value or a decoy for an above-market rate — the only honest test is total cost over 3–5 years, which is exactly what a broker comparison shows.
The refinance traps to avoid
- The 30-year restart. Refinancing five years into a loan onto a fresh 30-year term lowers your repayment but can add tens of thousands in interest. Match your remaining term, or keep repayments unchanged.
- Chasing cashback over rate. $3,000 today doesn't beat 0.3% extra on $600,000 for five years ($9,000).
- Serial applications. Multiple credit hits in quick succession hurt your file. Compare first, apply once, to the right lender.
- Forgetting you might not need to switch. Often your existing lender will drop your rate when asked with evidence in hand. We do this for clients routinely — same saving, zero paperwork.
How the free health check works
Send us your latest loan statement. Within 24 hours we benchmark your rate against 25+ lenders and give you one of three answers: your rate is sharp — stay put (worth knowing), your lender should do better — we'll renegotiate, or switching wins — here's the after-costs number. There's no fee and no obligation attached to any of the three.
Savings figures from PEXA's refinancer research; rate-gap research from the RBA. Verified 19 July 2026.