Question 1

What costs are involved in refinancing?

Accepted Answer

Common refinancing costs include a discharge fee ($150-350) from your current lender, application fee ($0-600) with the new lender, property valuation ($200-600), and legal/settlement fees ($200-800). Total switching costs typically range from $500 to $2,500. This calculator defaults to a $1,500 estimate which you can adjust.

Question 2

Should I refinance to a longer term?

Accepted Answer

Extending your loan term will lower your monthly repayments, which can help with cash flow. However, you may end up paying more interest over the life of the loan. Always check the 'lifetime saving' figure in the calculator — if it's negative despite a lower rate, the longer term is costing you more overall.

Question 3

What about break costs on fixed rate loans?

Accepted Answer

Breaking a fixed rate loan early can incur significant fees calculated based on the interest rate difference multiplied by the remaining fixed term and loan balance. These costs are not included in the default switching costs — add them manually if applicable. Break costs can sometimes exceed $10,000 on large loans.

Question 4

How often should I review my rate?

Accepted Answer

At least once a year. Interest rates change frequently, and many lenders offer better rates to new customers than existing ones. If your rate is more than 0.25-0.50% above competitive market rates, it's worth exploring your options. Some lenders will match competitor rates to retain you.

Question 5

Is it worth refinancing for a small rate difference?

Accepted Answer

Check the break-even period in the calculator. If switching costs are recovered within 12 months, it's generally worth refinancing. Even a 0.25% rate reduction on a $500,000 loan saves roughly $1,250 per year. The key is ensuring your total lifetime saving (accounting for all switching costs) is positive.

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