How much can refinancing actually save you?
Short answer: on an average $650,000 loan, switching from a typical existing variable rate to a competitive comparable rate saves about $2,592 a year — but the exact number depends on your balance, rate gap and loan term.
The worked example
Take a $650,000 owner-occupier loan on a 30-year term. Many Australians are sitting on a "loyalty tax" rate around 6.39% p.a. simply because they haven't refinanced since taking the loan out. A comparable rate available elsewhere today is closer to 5.84% p.a.
| Scenario | Rate | Monthly repayment |
|---|---|---|
| Current lender | 6.39% p.a. | $4,051 |
| Refinanced | 5.84% p.a. | $3,835 |
That's roughly $216 a month, or $2,592 a year, back in your pocket — for the same loan amount and term.
What it actually costs to switch
Refinancing isn't free, but the costs are small relative to the saving. Expect a discharge fee from your current lender (commonly $150–$350) and possibly a new lender's application or valuation fee. If you're on a fixed rate, break costs can apply and should be checked before switching.
Frequently asked questions
How much can I save by refinancing a home loan in Australia?
On a $650,000 owner-occupier loan, moving from a 6.39% variable rate to a comparable 5.84% rate saves about $216 a month, or roughly $2,592 a year, before any refinancing costs.
What does refinancing actually cost?
Typical costs are a discharge fee from your current lender ($150–$350) and sometimes a new lender's establishment fee. Break costs apply only if you're on a fixed rate. Most break-even points are reached within 1–3 months of the new lower repayment.
Is refinancing worth it for a small rate difference?
Even a 0.3–0.5 percentage point improvement is usually worth comparing on a loan over $400,000, since the saving compounds over the life of the loan and often outweighs one-off switching fees within a few months.