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Refinancing is a smart move for many homeowners who want to get the most competitive refinancing rate in the market, especially in times of movements in the official cash rate. If you find yourself contemplating whether this is the time for you to revisit your home loan and refinance, you must know that there are often costs involved in the process.

These fees can add up quickly and impact your overall savings especially if you were unable to have a plan. In this guide, you will have an idea of the fees that you may encounter when refinancing.

Application fee

If you are refinancing your home loan to another lender, your account will be considered new. Hence, some lenders charge an application fee for processing the refinancing application. This fee can range from a few hundred dollars up to $1,000 or more. It's important to check with the lender upfront about any application fees.

Valuation fee

When refinancing, one of the requirements is an updated valuation of your property. Typically, your lender will be doing their own valuation of the property to assess its current value on the market. A valuation fee may be charged to you as part of the refinancing process. This fee can vary depending on the location and size of the property but typically ranges from $200 to $500.

Discharge fee

A discharge fee may be charged by the lender if you are existing your terms with them as you refinance with another lender. This fee can range from a few hundred dollars to several thousand dollars, depending on the lender and the terms of the existing loan.

Settlement fee

A settlement fee may be charged by the lender or solicitor for the administrative work involved in finalizing the refinancing transaction. Expect to pay a few hundred dollars to $1,000 or more   

Lenders mortgage insurance (LMI)

If you hold less than 20% equity in your home, you will be charged a fee for lenders mortgage insurance (LMI). LMI is a one-time insurance premium that protects the lender in case the borrower defaults on the loan. The cost of LMI can vary depending on the size of the loan and the amount of equity in the property. You can use our LMI Calculator to calculate your LMI costs.

Legal fees

Legal fees may be charged by the solicitor or conveyancer for the legal work involved in the refinancing process. These fees can vary depending on the complexity of the transaction but typically range from $500 to $1,500.

Stamp duty

If the refinancing involves changing the name on the property title or transferring ownership, stamp duty may be payable to the state or territory government. The amount of stamp duty can vary depending on the value of the property and the state or territory where it's located.

Click here to calculate your stamp duty costs: stamp duty calculator

Tips on avoiding refinancing fees

It is important to note that not all these fees will apply in every refinancing scenario. Some lenders may waive or reduce certain fees, particularly if the borrower has a strong credit history and a good relationship with the lender.

Here are some tips to help you avoid or lessen the fees you have to pay when refinancing.

Try to negotiate with your current lender: Before exploring other lenders, consider reaching out to your current lender to negotiate better terms for your existing loan. Express your intention to refinance and inquire if they can offer any fee waivers or discounts to retain your business. Most lenders may be willing to negotiate in order to keep you as a customer.

Do your research and compare lenders: Take the time to research different lenders and compare their fees and charges. Look for lenders that offer competitive rates and lower or no fees for refinancing. Be sure to read the fine print and understand all the associated costs before making a decision. You can use online comparison sites like Your Mortgage to check out what is in the market.

Check for fee waivers or promotions: Some lenders may offer promotional deals or fee waivers for refinancing applications. Others even provide cashback offers. Keep an eye out for such offers and take advantage of them when available. Be sure to read the terms and conditions carefully to ensure there are no hidden costs.

Maintain a good credit score: A strong credit score can help you negotiate better terms with lenders. By maintaining a good credit history, you demonstrate financial responsibility and reduce the risk for lenders, potentially leading to better rates and lower fees. To maintain a good credit score, make sure you pay your bills on time, keep your credit utilization low, and avoid taking on unnecessary debt.

Get bundle or package deals from your lender: It might make financial sense for you to get package deals with a lender — a bundle will typically include multiple financial products, such as home loans, credit cards, and transaction accounts. Bundling your services with one lender may result in discounted or waived fees, including refinancing fees. However, ensure that the bundled products and rates are competitive and suitable for your needs.

When considering refinancing, it's important to weigh up the costs involved against the potential savings in mortgage repayments or access to equity. Using a mortgage calculator can help to estimate potential savings and determine whether refinancing is the right option.

Overall, refinancing can be a wise financial move for homeowners looking to save money on their mortgage repayments or access equity in their property. Still, it is vital to be aware of the fees and costs involved and to choose a lender that offers competitive rates and favourable terms.

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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
Featured Online ExclusiveUp to $4k cashback
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
6.15% p.a.
6.15% p.a.
$2,437
Principal & Interest
Variable
$0
$0
90%
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .