How do I know if refinancing is worth it?

Work out your monthly saving and divide your switching costs by that figure to find your break-even point. If you plan to keep the loan well past that point, it often makes sense, though everyone's situation differs.

What does it cost to refinance in Newcastle?

Costs can include a discharge fee from your old lender, settlement fees and a new loan setup fee, which together often add up to roughly a thousand dollars or more. The exact amount depends on your lenders and loan, so it is worth checking before you switch.

Can I refinance if I am on a fixed rate?

You can, but leaving a fixed rate early may trigger a break cost, which can be significant. It is a good idea to ask your lender or broker for that figure before making a decision.

Should I Refinance? A Simple Way to Decide | The Newcastle Mortgage Broker

“Should I refinance?” is one of the most common questions we hear in Newcastle. The honest answer is: it depends on the numbers, and they are easier to work out than you might think.

What refinancing actually means

Refinancing is when you swap your current home loan for a new one. Sometimes that is with a new lender, sometimes with your existing one.

People usually do it to get a lower interest rate, to lower their repayments, or to free up some equity. You can read more about how it all works on our refinance page.

It can be a smart move. But switching is not always free, and it does not always pay off. That is why the maths matters.

The break-even rule

Here is the simple idea. When you refinance, you often save money each month. But there are usually some costs to switch, like discharge fees, settlement fees, or a new loan setup fee.

The break-even point is how long it takes for your monthly savings to cover those switching costs. After that point, you are genuinely ahead.

The sum is easy:

Switching costs divided by monthly savings equals months to break even.

If you plan to keep the loan well past that point, refinancing often makes sense. If you might sell or move soon, it may not.

When staying put is the smarter call

Refinancing is not always the winner. Sometimes the best move is to do nothing, or just call your current lender for a better deal.

Switching may not be worth it if:

You plan to sell or move within a year or two.
Your switching costs are high and your savings are small.
You have a fixed rate with a break cost to exit early.
Your loan balance is small, so the dollar savings are tiny.

Lower repayments can also mean a longer loan term, which can cost more interest over time. It pays to look at the full picture, not just the monthly figure.

How to check your own numbers

Start by finding three things: your current interest rate, the rate you might switch to, and the likely costs to switch.

From there, work out your monthly saving and run the break-even sum. A broker can pull these figures together and compare lenders for you, so you are not guessing.

If you want a hand, you can request a callback and we will talk through whether refinancing stacks up for your situation. We can also look at your wider goals, whether that is a new home loan, an investment loan, or buying as a first home buyer.

There is no pressure either way. The goal is simply a clear answer to “should I refinance” that fits your life, not someone else’s.

This article is general information only and does not take your personal circumstances into account. Speak to a licensed mortgage broker for advice specific to you.