Reasons to refinance that hold up
Refinancing is not automatically good. It is a transaction with costs, and it is worth doing for a reason you can name.
Switching lender, or repricing where you are
There are two ways to end up better off, and only one of them involves paperwork. Existing lenders frequently discount to retain a borrower who has a credible reason to leave, and a retention offer costs nothing to ask for.
Repricing where you are
What switching actually costs
| Cost | When it applies |
|---|---|
| Discharge fee | Charged by the outgoing lender on nearly every refinance |
| Fixed rate break cost | If you exit a fixed term early. Not capped, and can be large when rates have fallen |
| Government registration fees | State-based, for discharging and registering the mortgage |
| New lender application or settlement fee | Varies. Often waived on refinance offers |
| Valuation fee | Frequently absorbed by the incoming lender, not always |
| Lender’s mortgage insurance | If the new loan lands above 80 per cent LVR. Rarely transferable between insurers |
| Ongoing package or annual fee | Where the new loan sits inside a package with offset and card |
| Title and PEXA costs | Small, and usually bundled into settlement |
- Break-even
- Costs ÷ saving
- Slowest step
- The discharge
- Compare on
- Remaining term
- Typical run
- 3–6 weeks
What a straightforward switch costs before any saving
- Discharge fee$350
- Registration and title fees$320
- New lender settlement fee$250
- Valuation$220
Illustrative amounts only, and a fixed rate break cost is excluded because it is uncapped. Not a quote and not an offer of credit.
View as a table
| Component | Amount | Share |
|---|---|---|
| Discharge fee | $350 | 31% |
| Registration and title fees | $320 | 28% |
| New lender settlement fee | $250 | 22% |
| Valuation | $220 | 19% |
| Total | $1,140 | 100% |
Add the one-off costs, divide by the monthly saving, and you have the break-even in months. If you are likely to sell or restructure before that point, staying put is usually the better decision.
Whether the saving is real
Two traps make a refinance look better than it is. The first is the term reset. Refinancing an eighteen-year remaining balance back out to thirty years lowers the repayment because the term is longer, not because the loan is cheaper. Keep the remaining term the same and the comparison becomes honest.
The same balance, over eighteen years and over thirty
Illustrative projection only, at an assumed constant rate. Not a quote and not an offer of credit.
View as a table
| Month | Kept at the 18 years remaining | Reset to a fresh 30 years |
|---|---|---|
| 0 | $420,000 | $420,000 |
| 54 | $341,000 | $383,000 |
| 108 | $249,000 | $337,000 |
| 162 | $141,000 | $281,000 |
| 216 | $0 | $213,000 |
Here is the honest number.
Documents for a refinance
| Document | Usual requirement |
|---|---|
| Identification | Passport or driver licence for each applicant |
| Income evidence | Two recent payslips, or two years of returns and financials if self-employed |
| Current mortgage statements | Six to twelve months, showing conduct as much as balance |
| Rates notice | Current, for the security property |
| Insurance certificate | Building cover noting the incoming lender |
| Liability statements | Every card, loan and buy-now-pay-later account |
| Bank statements | Three to six months of transaction accounts |
| Discharge authority | Signed and lodged with the outgoing lender |
Repayment history on the existing mortgage matters more on a refinance than on a purchase. A single missed payment in the last six months will be asked about, and an unexplained pattern of them will decide the outcome.
The refinance timeline
- 01
Position and comparison
Current rate, remaining term, LVR and structure against what your profile now qualifies for. We ask your lender for a retention offer at the same time.
- 02
Application
Lodged with the chosen lender, documents attached. Most refinances are assessed faster than purchases because there is no contract deadline driving the file.
- 03
Valuation
Often a desktop or automated valuation on a straightforward refinance. A full inspection where the property is unusual, rural, or the LVR is tight.
- 04
Formal approval and documents
Unconditional approval, then loan documents to sign, commonly electronically.
- 05
Discharge
The discharge authority goes to the outgoing lender. This is the slow step. Allow two to three weeks, sometimes longer, and lodge it early rather than at the end.
- 06
Settlement
The new lender pays out the old one, any consolidated debts are cleared, and the title is transferred electronically.
Refinancing when something is wrong
Most of the refinances we write are not simple rate moves. They are files another broker or a bank has already looked at and put down. The common blockers each have their own answer.
| What is in the way | Where we look |
|---|---|
| Tax debt behind a trading business | Lenders that fund a stated ATO payout with evidence of the balance and lodgements |
| A default or judgment on file | Non-bank and specialist lenders that price the listing rather than decline it |
| Recent mortgage arrears | Specialist lenders that can capitalise arrears where equity supports it |
| Self-employed with one year of returns | Lenders accepting a single year, or alt doc verification instead |
| Servicing shortfall on paper | Longer term, debt consolidation inside the refinance, or a different assessment method |
| Valuation came in under expectation | A second lender with a different valuation panel, or a restructure at a lower LVR |
Structure worth fixing while you are here
A refinance is the cheapest moment to correct a structure you have been living with. It costs nothing extra to set the loan up properly at the same time as moving it.
Credentials
Related
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Home Loans
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Reading
Worth understanding first
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