In short: This calculator compares your current home loan with a new one and shows the monthly saving, the total interest saved, and how many months it takes to recover switching costs. As a guide, a 0.50 percentage point rate cut on a $600,000 loan saves about $190 a month and pays back typical $1,000 to $1,500 switching costs in well under a year.
- Current repayment$3,971.72
- New repayment$3,725.21
- Break-even on switching costs5 months
- Interest saved over remaining term (net of costs)$78,670
- 5-year saving (net of costs)$13,591
Keeps the same remaining term so you compare like-for-like. Resetting to 30 years lowers repayments but can increase total interest.
Monthly saving: $246.51
That is a general estimate on standard assumptions. Every lender applies its own expense benchmarks, income shading and policy, so the real figure moves from lender to lender. Gorakh spent years as a senior credit officer deciding exactly these questions. Send him the numbers above and he will tell you what is realistic and which lenders fit — at no cost to you for home loans.
- A former senior credit officer reads itGorakh assessed loan applications on the lender side before he became a broker.
- A real office you can visit23 Astbury Crescent, Mickleham VIC 3064 · ABN 90 160 461 553
- Fees and complaints in writingRead the Credit Guide and our complaints and AFCA process before you commit to anything.
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Prefer to talk first? Book a free 15-minute call 0426 403 703 Full 2-minute pre-assessment
Most Melbourne borrowers who have not reviewed their loan in two years pay more than a new customer at the same bank.
How this calculator works
The tool runs two amortisation schedules side by side: your existing loan at its current rate over the remaining term, and the proposed loan at the new rate over the term you choose, both using the standard principal-and-interest formula.
What it compares
- Monthly repayment difference between the two loans.
- Lifetime interest difference, holding the remaining term constant so the comparison is fair.
- Break-even point: total switching costs divided by the monthly saving.
- Term reset effect: if you refinance a 28-year remaining loan onto a fresh 30-year term, the repayment falls further but total interest can rise.
Switching costs typically include discharge, mortgage registration and the new lender's application or valuation fees. Fixed loans may also carry break costs; read breaking a fixed rate loan before you assume the saving.
How to use the result
Look at the break-even months first. If you recover costs within 12 months and plan to keep the property for years, refinancing is usually a clear win. Then check lifetime interest on the same remaining term, not a reset 30 years, so a lower repayment is not hiding a longer loan. Finally, weigh features you will use, such as an offset account, against a cheaper basic loan. Our refinancing guide walks through the whole process.
Worked example
A Wollert homeowner owes $600,000 with 28 years remaining at 6.50% p.a. and is offered 6.00% p.a. by another lender (for illustration), with $1,200 of switching costs:
| Current loan at 6.50% | New loan at 6.00%, 28 years | New loan at 6.00%, reset to 30 years | |
|---|---|---|---|
| Monthly repayment | $3,882 | $3,691 | $3,597 |
| Monthly saving | $191 | $285 | |
| Total interest remaining | $704,384 | $640,090 | $695,029 |
| Interest saved | $64,294 | $9,355 | |
| Break-even on $1,200 costs | about 7 months | about 4 months |
Keeping the 28-year term saves $64,294 in interest. Resetting to 30 years drops the repayment more but gives up almost all of that saving. A smart middle path is to take the 30-year term for flexibility and keep paying $3,882, which clears the loan faster than either option.
What this calculator doesn't include
- Fixed-rate break costs, which depend on how rates have moved since you fixed and can run into thousands.
- Cashback offers, which improve the break-even but should not drive the decision.
- Whether you pass the new lender's serviceability test. Refinancing is a new application assessed with the 3% APRA buffer.
- LMI, which may apply again if your loan is above 80% of the current valuation. Check your position with the LVR calculator.
Tips to improve the outcome
- Ask your current lender for a rate review first. A retention discount with no switching costs is sometimes the best deal.
- Get a current valuation estimate before applying. If your LVR has dropped below 80% since purchase, better pricing tiers open up.
- Keep the same remaining term, or keep paying the old repayment amount after you switch.
- Consolidate expensive debt at the same time only if you keep paying it off fast; see the debt consolidation calculator.
- Time the switch for when a fixed period ends to avoid break costs.
Frequently asked questions
Is it worth refinancing for a 0.5% lower rate?
Usually yes. On a $600,000 loan, 0.50 percentage points saves about $191 a month and around $64,000 in interest over 28 years. With switching costs of $1,000 to $1,500, you break even within a year. The exception is a fixed loan with large break costs, or a loan you expect to pay out within a year or two.
How much does it cost to refinance a home loan in Australia?
Typical costs are a discharge fee from your existing lender, government discharge and registration fees, and the new lender's application or valuation fee, usually $500 to $1,500 in total for a variable loan. Fixed-rate break costs and LMI (if your LVR is above 80%) can add substantially more.
Does refinancing restart my 30-year loan?
Only if you choose a new 30-year term. Most lenders will match your remaining term if you ask. In the example above, resetting $600,000 from 28 to 30 years cuts the repayment by a further $94 a month but wipes out $55,000 of the interest saving. Ask to keep the remaining term, or keep paying the higher amount voluntarily.
How often should I refinance?
Review your loan every 12 to 18 months, but refinance only when the saving clearly beats the costs and hassle. Many borrowers ask their lender for a repricing every year and switch only when the lender refuses to match a genuine offer. Our guide on when to refinance covers the signals to watch.
Can I refinance to release equity for an investment property?
Yes. If your Melbourne home has grown in value, a refinance can increase your loan to release usable equity, typically up to 80% of the new valuation, as a deposit for an investment purchase. The equity calculator shows how much is available, and our guide on using equity to buy an investment property explains the structure.
Talk to GNT Finance
GNT Finance reviews your loan against dozens of lenders and tells you honestly whether switching is worth it, negotiating with your existing bank first. Our refinancing service is at no cost to you in most cases. Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.