Refinance
Calculator Australia 2026

The refinance break-even calculator helps you determine whether switching your home loan to a lower interest rate will save you money after accounting for all refinancing costs. The core calculation is straightforward: divide your total refinancing costs by the monthly repayment savings to find the break-even point in months. Before that point, the upfront costs outweigh the savings. After it, every dollar saved goes directly into your pocket. This simple metric tells you exactly how long you need to stay with the new loan before refinancing becomes worthwhile.

For example, refinancing a $500,000 loan with 25 years remaining from 6.80% to 5.99% reduces your monthly repayment from $3,491 to $3,221 — a saving of $270 per month. With $2,000 in refinancing costs, your break-even point is just 8 months. Over the remaining 25 years, you will save approximately $79,000 in total interest. The monthly repayment is calculated using the standard annuity formula, the same method Australian lenders use. It takes your loan balance, applies compound interest over the remaining term, and produces a fixed monthly amount that fully repays both principal and interest by the end of the loan.

Costs to Factor In

Refinancing is not free, and understanding the full cost is essential for making an informed decision. The discharge fee charged by your current lender typically ranges from $150 to $400 and covers the administrative cost of closing your existing loan and deregistering the mortgage from the property title. Your new lender may charge an application or establishment fee of $0 to $600, though many competitive lenders waive this entirely. A property valuation is usually required by the new lender to confirm the current market value of your home, costing between $200 and $600 depending on the property type and location. Legal and settlement fees cover the conveyancing work needed to transfer the mortgage between lenders, typically $200 to $500. If your loan-to-value ratio increases above 80 percent as a result of the refinance, you may also need to pay Lenders Mortgage Insurance, which can add thousands to the cost. Always request a full cost breakdown from both your current and new lender before committing.

When Refinancing Makes Sense

Refinancing is most beneficial when three conditions align. First, the interest rate difference between your current loan and the best available rate is at least 0.50 percentage points. On a $500,000 loan, a 0.50% reduction saves roughly $160 per month, which adds up to nearly $48,000 over 25 years. Second, you have a substantial remaining loan term, ideally more than 10 years. The longer the remaining term, the more months of savings you accumulate, amplifying the benefit of even a modest rate reduction. Third, the break-even period is comfortably short, ideally under two years. A short break-even period means you recoup your refinancing costs quickly and spend the majority of your remaining term enjoying lower repayments. Additional triggers include gaining access to better loan features such as a full offset account, redraw facility, or flexible repayment options that your current loan does not offer.

When Refinancing Does Not Make Sense

Refinancing is not always the right move. If you are on a fixed rate with a significant remaining fixed period, the break costs can easily outweigh any savings from a lower variable rate. Fixed-rate break costs are calculated based on the difference between your contracted rate and the prevailing wholesale rate, multiplied by your loan balance and remaining fixed term. These costs can run into tens of thousands of dollars. Refinancing also makes little sense if you are near the end of your loan term. With only a few years remaining, the monthly savings are small and the break-even period may exceed your remaining term. Similarly, if your property value has declined and your LVR has increased above 80 percent, the cost of paying LMI again could negate any rate savings. Finally, if your credit score has deteriorated since you took out your original loan, you may not qualify for a better rate, or you may face higher pricing from the new lender.

How to Use This Calculator

Start by entering your current outstanding loan balance, which you can find on your latest mortgage statement or in your online banking portal. Next, enter the interest rate you are currently paying and the new rate you have been quoted or found through comparison shopping. Set the remaining term on your existing loan in years. Then enter the estimated refinancing costs, using $2,000 as a reasonable starting point for most straightforward refinances. If you are breaking a fixed rate early, add the estimated break cost in the exit fees field. The calculator will instantly show your current and new monthly repayments, the monthly and annual savings, the break-even month, and the total savings over the remaining loan term after deducting all refinancing costs. Try adjusting the inputs to model different scenarios, such as a slightly higher or lower new rate, to see how sensitive the savings are to rate changes.