Refinancing typically costs between $800 and $3,000, depending on your lender and situation. Common fees include discharge fees from your current lender, application/settlement fees with the new lender, and valuation fees. If you’re breaking a fixed-rate loan early, break costs can add thousands more depending on how much time is left on the fixed term. Many of these costs can be offset — sometimes fully — by cashback offers, which currently range from roughly $1,000 to $4,000 across Australian lenders.

It comes down to your break-even point — how many months of interest savings it takes to recover the upfront cost. As a rule of thumb: add up your total refinancing cost, subtract any cashback, then divide by your expected monthly interest saving. If you plan to stay in the property well beyond that break-even point, refinancing is usually worthwhile. On larger loan balances, even a modest 0.5% rate reduction can pay for itself within a few months.

The main risks are upfront costs (application, valuation, discharge, and possible break fees) and, if you’re borrowing above 80% of the property value again, potentially paying Lenders Mortgage Insurance (LMI) a second time. Refinancing also resets some loan terms, so if you’re not careful about the new loan term length, you can end up paying more interest over the life of the loan even at a lower rate.

A few situations where refinancing usually doesn’t make sense: your current equity is below 20% (risking LMI on the new loan), you’re planning to sell or move within the next year or two (not enough time to reach your break-even point), or you’re still well inside a fixed-rate term with a break cost that would outweigh the savings. A broker can quickly model whether your specific situation clears these hurdles.

The most common ones: applying for other credit (credit cards, car loans) shortly before refinancing, which can affect approval; focusing on the headline rate instead of the comparison rate, which includes fees; and not checking break costs on a fixed-rate loan before switching. It’s also easy to overlook that missing payments during the refinance process can hurt your credit file just as much as after.

Refinancing usually takes four to eight weeks from application to settlement, though some lenders offer faster turnarounds. Things that can disqualify or delay an application include a recent drop in income, a poor repayment history on your current loan, insufficient equity, or recently taking on new debt. None of these are necessarily deal-breakers — they just need to be addressed in how the application is structured.