Mortgage Refinance Calculator

It depends on four things, not one. The rate difference, how many years you have left, what it costs you to move, and what you do with the saving. A rate cut on a loan written back out to a new 30-year term can cost more overall than the loan you left. Model your own figures in the calculator above: if the lifetime number is positive and the break-even is comfortably short, refinancing is worth a proper look.

Work out your repayment on your current rate over the years you have remaining, then the repayment on the new rate over the same remaining term. The difference is your monthly saving. Multiply the interest difference across the term, add or subtract any change in annual or package fees, then subtract your switching costs. The calculator above does all of this, which is why its answer differs from a simple two-repayment comparison.

A refinance can be structured over a new 30-year term. If you have less than 30 years remaining, that extends the time you're in debt. Someone eight years into a 30-year loan who refinances back to 30 years sees the repayment fall, but has added years of interest to a debt they had already partly retired. Lenders will generally set the new loan to your remaining term if you ask for it.

Four to six weeks is typical from application to settlement, though it can be quicker where the valuation is straightforward and slower where a lender is running long assessment times or the property needs a full valuation. Your existing loan keeps running normally until the new one settles.

Most lenders price most sharply at 80% of the property's value or less, so on an $800,000 property that is a loan up to around $640,000. You can generally borrow above 80% but lender's mortgage insurance usually applies, which can be a significant cost. Refinancing also has to pass the new lender's servicing assessment, which uses a rate buffer above the actual rate.

LVR is your loan divided by the property value. At 80% or below you have access to the widest choice of lenders and the sharpest pricing. Between 80% and 90% the options narrow and insurance may apply. Above 90% refinancing is possible with some lenders but the cost often outweighs the rate saving, so it is worth getting the property valued before assuming your LVR.

Typically a discharge fee from the outgoing lender, a settlement or establishment fee and government registration fees at the new lender, and sometimes a valuation fee. Together these commonly total a few hundred to around a thousand dollars. Fixed loans can attract break costs, which are calculated by the lender and can be substantial. Many lenders waive or absorb parts of this.

The break-even figure in the calculator divides your switching costs by your monthly saving. A shorter break-even means the switching costs are recovered sooner. If it stretches to several years, consider whether the expected saving justifies switching, and whether there are other reasons for the refinance such as restructuring, consolidating debt or accessing equity.

A formal application creates a credit enquiry, which is visible to other lenders for a period. Multiple applications in a short window can read poorly. Reviewing your options doesn't create an enquiry — only lodging an application does.

No. A slightly lower rate on a longer term, with higher fees, or with features you lose can leave you worse off. The number worth comparing is the total cost to clear the debt, not the monthly repayment or the headline rate.

Often yes, where there is enough equity and the loan still fits the lender's limits. Because consumer debts are usually priced well above mortgage rates, the cash-flow relief can be immediate. The risk is stretching a short-term debt across decades, so it only works where the freed-up cash flow is redirected back at the mortgage and the accounts are closed behind you.

Structurally, yes — it is a new loan with a new term, new features and a new lender or product. What it does not have to reset is the finish line. Ask for the term to match what you have left, and keep making your existing repayment on the lower rate, and the rate saving goes to your principal rather than to extra years of interest.