Short answer: it depends on numbers only you have. But the method is the same for everyone, and once you know it, a "savings estimate" stops being marketing and starts being maths you can check yourself.
Most refinancing calculators — including the good ones — spit out a single figure and move on. That's useful for a headline, less useful when you're deciding whether to spend a Saturday afternoon on paperwork. This guide breaks the calculation into its real parts, so you can sanity-check any number a lender, broker or calculator gives you.
The 4 numbers that decide your savings
Every refinancing calculation, however it's dressed up, comes down to the same four inputs:
- Your loan balance — what you actually owe today, not your original loan amount.
- Your rate gap — the difference between your current rate and the rate you could genuinely qualify for elsewhere.
- Your remaining term — how many years of repayments are left, which determines how long the saving compounds for.
- Your switching costs — discharge fees, any new-lender fees, and break costs if you're leaving a fixed rate early.
Get these four right and you can estimate your own saving almost as accurately as a broker can, before you ever fill in a form.
A rough rule of thumb: on a $600,000 loan, every 0.1 percentage point of rate gap is worth about $30–$35 a month, or roughly $9,000–$10,500 over 25 years, before switching costs. Scale that up or down for your own balance.
Why the advertised rate can mislead you
Lenders are required to publish a comparison rate next to their headline interest rate, and it's usually the more honest number. The interest rate is what accrues on your balance. The comparison rate folds in most standard fees, expressed as a single annualised percentage, so two loans with the same interest rate can have different comparison rates depending on what they charge you to hold the loan.
The catch: comparison rates are legally calculated on a standard $150,000 loan over 25 years, which won't match your situation if your loan is larger or smaller. Use it to compare two offers apples-to-apples, not as a prediction of your exact repayment.
What refinancing really costs
Savings estimates are only honest if they're net of costs. Here's what you're actually likely to pay:
| Cost | Typical range |
|---|---|
| Discharge fee (old lender) | $150 – $400 |
| Establishment / application fee (new lender) | $0 – $600 (often waived for refinances) |
| Mortgage registration fees (government, varies by state) | ~$118 – $260 |
| Total, standard variable-to-variable switch | $500 – $1,500 |
| Break cost (only if exiting a fixed rate early) | Can range from hundreds to tens of thousands |
Refinancing doesn't trigger stamp duty in Australia — that's only payable when you buy property, not when you switch lenders on an existing one.
The one cost that can wipe out your savings
If your loan-to-value ratio (LVR) is above 80%, moving to a new lender can trigger Lenders Mortgage Insurance again — even if you already paid it once with your current lender. LMI isn't transferable between loans, and on a high LVR it can run into thousands of dollars, easily erasing years of rate-gap savings in one hit.
Before you refinance, get a rough idea of your current property value and loan balance to check whether you're above or below the 80% line. If you're close, it may be worth waiting until you cross it, or asking your broker whether a specific lender will waive LMI for your profile.
3 worked examples
All three assume a 25-year remaining term, principal-and-interest repayments, and a 0.5 percentage point rate gap — roughly what a borrower who hasn't renegotiated in a couple of years might realistically close, based on the loyalty-tax gaps we cover in our 2026 refinancing guide.
| Loan balance | Rate change | Monthly saving | Saving over remaining term |
|---|---|---|---|
| $350,000 | 6.3% → 5.8% | ≈ $107 | ≈ $32,000 |
| $600,000 | 6.2% → 5.7% | ≈ $185 | ≈ $55,000 |
| $900,000 | 6.4% → 5.9% | ≈ $276 | ≈ $82,900 |
Figures calculated using a standard principal-and-interest amortisation formula, before switching costs. These are illustrative examples, not quotes — your actual eligible rate depends on your lender, LVR and credit profile.
Want this calculated on your real numbers?
Refii's savings estimate takes about two minutes and benchmarks your loan against 30+ lenders.
The break-even formula
Once you know your monthly saving and your switching costs, one calculation tells you whether it's worth doing:
Switching costs ÷ Monthly saving = Break-even period (in months)
Example: $1,000 in switching costs ÷ $185 monthly saving ≈ 5.4 months. If you plan to keep the loan well beyond that, refinancing is very likely worth it. If you're planning to sell or pay off the loan within that window, it may not be.
You need your real balance, rate and remaining term — not your original loan details.
Ask what you'd individually qualify for, based on your LVR and credit profile.
Sources
- NAB, What is a comparison rate?
- money.com.au, A Complete Guide to Home Loan Fees in Australia.
- money.com.au, Lender's Mortgage Insurance Guide.