Mortgage refinancing: compare the total cost, not just the rate

A lower advertised rate is an invitation to investigate, not enough evidence to switch. Refinancing should be assessed against the cost of leaving the old arrangement and the full terms of the new one.

Collect written costs first

Ask about any fixed-rate break charge, discharge or legal costs, valuation, new loan fees and repayment of previous cash incentives. A break quote can change, so check its validity. Also read any new cashback conditions: receiving cash now can create a repayment obligation if you leave early.

Keep the comparison fair

Compare offers using the same balance and remaining term. Resetting a loan to a longer term may lower payments while increasing lifetime interest. If you need lower payments for cash-flow reasons, recognise that trade-off explicitly rather than counting it as a pure saving.

Use a break-even estimate carefully

Suppose, purely for illustration, switching costs are $2,400 and the estimated monthly saving is $150 on comparable terms. Simple break-even is 16 months. This rough calculation excludes changes in rates, balances and timing; it is not a personalised forecast or offer.

If you expect to sell sooner, the result matters differently. Ask for a fuller comparison including your likely holding period and outstanding balance, not just the first payment.

Check execution as well as price

• Can you qualify for the new loan on your current circumstances?
• Will the new features support planned extra repayments?
• Who handles the discharge and settlement timing?
• Are linked accounts and automatic payments ready to move?

Our refinance service can help compare options. If no lender change is needed, a refix review may be the more relevant conversation.