Refinance Savings Calculator

When should you refinance?

A good rule of thumb is to review your home loan every 1–2 years. Lenders often reserve their sharpest rates for new customers, so existing borrowers quietly drift onto higher rates — known as the "loyalty tax". Refinancing resets you to a competitive rate and may unlock cashback offers. Before you switch, it's worth understanding what refinancing actually costs — most refinances run $500–$1,500 in fees, often covered by cashback.

The four situations where refinancing almost always pays for itself are: your fixed rate is expiring and you're about to roll onto a much higher revert rate; your loan is more than two years old and has never been repriced; your property has risen in value enough to push you under 80% LVR; or you're carrying personal loans and credit cards that could be consolidated at home loan rates.

How the calculation works

The calculator prices your remaining balance twice — once at your current rate and once at the new rate — over your remaining term, using standard principal and interest amortisation. The difference between the two monthly repayments is your monthly saving. Multiplying that across the remaining term and subtracting your switching costs gives the lifetime saving. Because the balance shrinks each month, the interest saved is largest in the early years, which is why refinancing sooner beats refinancing later.

One important nuance: if you refinance to a fresh 30-year term when you only had 24 years left, your repayment falls further but you'll pay more total interest. Keep the remaining term field honest to see the true comparison, then decide separately whether you want to stretch the term for cashflow.

Worked example

A Melbourne couple had $612,000 left on a loan at 6.74% with 26 years remaining, repaying about $4,085 a month. We moved them to 5.84% with the same term. The new repayment was roughly $3,733 — a saving of about $352 a month, or $4,220 a year. Their switching costs were $1,050 (discharge fee, new settlement fee and a valuation), fully offset by a $2,000 cashback. Over the remaining term the interest saved was well past $100,000 while their repayment schedule stayed exactly the same length.

Compare that to waiting. Refinancing 12 months later would have cost them roughly $4,200 in interest they never had to pay — which is why we suggest running the numbers the moment your rate stops looking sharp rather than at the next fixed-rate expiry.

What lenders check when you refinance

• Serviceability. Your income is tested at roughly 3% above the new rate, so a lower rate does not automatically mean easy approval.
• Equity. Under 80% LVR is the sweet spot; above it, LMI can be payable again on the new loan.
• Repayment history. Six to twelve months of clean conduct on your current loan and everyday accounts.
• Purpose. A straight rate switch (dollar-for-dollar) is assessed more simply than a refinance with cash out.

Keep reading

• The complete refinancing guide — timing, process and paperwork end to end.
• Refinancing when your fixed rate expires.
• Are refinance cashback offers worth it?
• Case study: $9,400 a year saved off a fixed-rate cliff.
• Extra repayments calculator — bank the saving instead of spending it.