Can you refinance a fixed-rate home loan?

Get a current payout figure

A break cost changes over time, so an old estimate is not reliable. Ask the lender for an indicative break cost and complete payout figure, including any fee for exceeding permitted extra repayments. Confirm how long the quote remains valid and whether the final amount is calculated at settlement.

• Check the fixed-rate expiry date.
• Request current break and discharge costs.
• Compare the remaining fixed payments with alternatives.
• Include the new lender's fees and approval risk.

Waiting can sometimes be cheaper

If the fixed period ends soon, waiting may avoid a break cost while allowing time to compare the revert rate and other lenders. However, a large rate or structural benefit can still justify leaving early. Calculate both paths.

Why break costs vary

When a lender funds a fixed loan, it prices the agreement around market rates for that period. If comparable market rates fall and you repay early, the lender may incur an economic loss, which can form part of the break calculation. If rates have risen, the economic component may be low or zero. The formula is contractual and lender-specific. Only the current lender can provide a reliable figure for your loan and proposed repayment date.

Compare staying and leaving

Calculate the interest and fees expected until fixed expiry, then compare the new loan over the same period. Add the break cost, discharge, registration and new-loan costs. If the refinance also resets the term, calculate a second comparison using the existing remaining term. Include features only when they have real value. For example, an offset may create savings if you hold cash, but it does not automatically justify thousands of dollars in break costs.

Start the review before expiry

A fixed loan normally moves to a variable revert rate at expiry. Ask the existing lender what that rate will be and request a pricing review. Begin comparing several weeks before the end date so documents and valuation can be prepared, but coordinate settlement carefully. Leaving even a few days before expiry could still trigger a break calculation. Do not allow the urgency of a looming expiry to replace a proper product and cost comparison.

Questions to ask before you proceed

• What is the net saving after every discharge, application, valuation and ongoing fee?
• How long is the break-even period if the remaining loan term stays the same?
• Which valuation, income or policy issue could still change the approval or pricing?

Official guidance: Moneysmart glossary: Break fee

This is general information, not personal financial, tax or legal advice. Lending criteria, fees and eligibility vary.

Related questions

• When is refinancing actually worth it?
• How much does refinancing cost in Australia?
• Should I refinance or ask my bank for a lower rate?