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Refinancing

Refinancing costs, equity and switching lenders

Start with a recent loan statement, the remaining term and the reason you want to switch. Compare the current loan, a repricing offer and a new lender on the same assumptions so a lower repayment is not mistaken for a lower total cost.

Prepared by NewGen Finance Brokers · Updated

How do I calculate refinance break-even?

Divide total switching costs by monthly savings. Then check features, loan term, fees, and whether repricing with the current lender is simpler.

For example, $1,800 in switching costs divided by $150 in net monthly savings gives a 12-month simple break-even. This assumes the saving stays constant and the costs are paid upfront. Use the calculator to explore your own assumptions.

Calculate break-even Link to this answer

Further reading: Moneysmart: switching home loans

How much equity can I cash out?

A common guide is property value multiplied by lender LVR limit, minus current loan balance, subject to serviceability and purpose.

Illustration: a $900,000 valuation at an assumed 80% maximum LVR gives $720,000. Subtracting a $600,000 balance leaves $120,000 before costs and any other limits. This is not an approved cash-out amount.

Estimate usable equity Link to this answer

Further reading: Moneysmart: switching home loans

Will I have to pay LMI again when I refinance?

A new lender may require LMI if the new loan falls within its insured lending criteria. Do not assume the original premium transfers. Include any new insurance cost in the refinance calculation and ask whether any refund is available from the current arrangement.

Compare switching costs Link to this answer

Further reading: Moneysmart: switching home loans

Can I refinance before my fixed rate ends?

You can investigate switching during a fixed period, but a break cost may apply. Request a current written payout estimate and compare it with the expected benefit. A calculator cannot reliably infer your lender’s break cost from the interest rate alone.

Review your fixed loan Link to this answer

Further reading: Moneysmart: fixed-rate break fees

Can refinancing remove an ex-partner from the home loan?

Changing borrowers needs lender approval and may involve changes to ownership and legal arrangements. Ask your broker to assess the proposed borrower’s position and coordinate timing with your solicitor. A private agreement between partners does not itself release a borrower from the lender’s contract.

Discuss a borrower change Link to this answer

Further reading: Moneysmart: divorce and separation checklist

Does my offset account automatically move to the new lender?

Do not assume it does. Ask how the old loan will be paid out, what happens to the offset balance, and which account will be linked to the new loan. Check the new offset is operating as intended and update payments connected to the old account.

Plan the loan switch Link to this answer

Further reading: Moneysmart: offset accounts

How should I compare a refinance cashback with a lower rate?

Put the incentive beside the rate, fees, switching costs, eligibility conditions and time you expect to keep the loan. For example, $2,000 is equivalent to ten months of $200 savings before other costs. Use the actual offers; this is an illustration, not an available cashback promotion.

Calculate refinance break-even Link to this answer

Further reading: About NewGen and its services

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