The refinance health check: five numbers to review
Rate matters, but it is not the whole story. Here are the loan details that can change the real value of refinancing.
1. Your current interest rate
Find the actual rate on your statement rather than relying on the product name or a lender’s advertised rate. Compare it with relevant alternatives for your loan-to-value ratio, repayment type and property purpose.
2. Repayments at the same remaining term
A fair comparison keeps the remaining loan term consistent. Restarting a 30-year term may lower the monthly repayment but can increase the total interest paid unless you maintain higher repayments.
3. Switching and ongoing costs
Include discharge, application, valuation, settlement and package fees, plus any break cost on a fixed loan. Divide the total switching cost by the expected monthly saving to estimate the break-even period.
4. Loan balance and property value
Your estimated property value and loan balance determine the loan-to-value ratio. This can influence available pricing and whether lenders mortgage insurance may apply. A formal valuation may differ from an online estimate.
5. Features you actually use
Offset accounts, redraw, repayment flexibility and split-loan options can have real value—but only if they suit how you manage money. Compare the net benefit after fees.
- Check the break-even period.
- Compare the same remaining term.
- Review fixed-rate implications.
- Avoid adding short-term debt to a long home-loan term without a repayment plan.
Important information
This article provides general information only and does not take your objectives, financial situation or needs into account. Lending policies and government programs can change. Seek personalised credit assistance before acting.