Refinance, Calculators
Refinance for Australian property investors. Part of the Calculators hub on Shelby Limited, AI strategy, calculators and expert matching.
Refinance calculator, what actually determines whether switching is worth it
Refinancing is worth it when the interest saved over your realistic remaining hold period exceeds the switching costs, discharge fees, new loan establishment, valuation and any break costs on a fixed rate. The calculator compares total cost of both loans rather than the headline rate.
The rate comparison is the easy part, and it is also where most refinance decisions go wrong. A loan that is 0.4% cheaper looks like an obvious switch until you notice the new lender resets the term back to 30 years, which can increase total interest paid even at the lower rate.
There are three numbers that decide it. The interest saved over the period you actually intend to hold the loan, not the full 30 years, because most people refinance or sell again within five to seven. The switching cost, which includes discharge and establishment fees, a valuation, and potentially a substantial break cost if you are inside a fixed term. And the term, because keeping your existing remaining term rather than restarting is often worth more than the rate difference itself.
The fourth factor is not a number: serviceability. Refinancing requires a fresh credit assessment at current buffered rates, and borrowers whose income or expenses have changed since the original approval sometimes find they no longer qualify for the loan they already have. That is the 'mortgage prison' scenario, and it is worth testing before you pay for a valuation.
Use the calculator to model the break-even month. If it lands beyond the point you realistically expect to still hold this loan, the switch is not paying for itself.
Frequently asked questions
How long does it take to break even on a refinance?
Divide the total switching cost by the monthly repayment saving. If the break-even point falls beyond your expected remaining hold period, the refinance costs more than it saves.
What are the costs of refinancing?
Typically a discharge fee from the existing lender, establishment or application fees on the new loan, a valuation fee, government registration fees, and break costs if you are exiting a fixed rate.
Does refinancing reset my loan term?
By default many lenders write a new 30-year term, which lowers the repayment but increases total interest. Ask for the remaining term to be matched instead.
Will refinancing hurt my credit file?
Each application is recorded as a credit enquiry. One or two are unremarkable; several applications in a short period can affect how lenders assess you.
Can I refinance to access equity?
Yes, subject to a valuation and serviceability. Borrowing against equity increases the loan balance and repayment, and using released equity for investment has different tax treatment to using it personally, get advice before structuring it.