How Often Should You Refinance — And Is It Worth It?

How often should you refinance?

There is no rule that says you must refinance on any particular schedule — the mortgage market does not work like a car service interval. What most borrowers actually do is refinance every three to five years, and the trigger is usually one of three things: a fixed rate is about to expire and roll onto a much higher variable rate, life has changed (income, property value, family situation), or the gap between what you are paying and what is available in the market has grown wide enough to be worth acting on.

A rough rule of thumb we use with clients: if your current rate is sitting more than 0.30% to 0.50% above what a comparable loan is offering, it is worth running the numbers. Below that, the switching cost can eat most of the saving, especially on smaller balances. Loyalty rarely pays in home lending — most lenders quietly reserve their sharpest rates for new customers, not existing ones, which is exactly why periodically checking in is worth the half hour it takes.

We generally suggest a light check-in every 12 months and a genuine refinance conversation whenever a fixed term is ending or that gap opens up. You do not need to act every time — you need to know where you stand, and decide from there.

What does refinancing actually cost?

Refinancing is not free, but it is rarely expensive relative to the savings on offer. The costs to budget for:

• Discharge fee from your current lender — typically $150 to $400.
• Government fees for registering the new mortgage and discharging the old one — usually $150 to $350 combined, varies by state.
• New lender's establishment fee — some lenders waive this, others charge up to a few hundred dollars.
• Break costs, if you are leaving a fixed rate early — this is the one that can genuinely bite, calculated by the lender based on how far wholesale rates have moved since you fixed. Always get this figure in writing before you commit.
• Lenders Mortgage Insurance — only relevant if your equity is under 20% and you are increasing your loan without portable LMI.

All up, a straightforward refinance without a break cost usually lands somewhere between $450 and $900. Some lenders also run cashback offers of $1,000 to $3,000 for new refinance customers, which can offset most or all of the switching cost — though never chase a cashback onto a worse rate. Compare the whole package, not just the headline offer.

Is refinancing worth it for me?

This comes down to a simple comparison: what you save in interest versus what it costs you to switch, over how long you will actually hold the new loan. On a $600,000 loan balance, a 0.30% rate reduction saves roughly $1,800 a year in interest — enough to clear a typical $450 to $900 switching cost within three to six months. From there, every extra month is money back in your pocket.

Where it is usually not worth it: if your loan balance is small (say, under $150,000), if you are planning to sell or pay off the loan within the next year or two, or if you are only chasing a marginal 0.10–0.15% improvement that a quick call to your current lender could probably match anyway. It is always worth asking your existing lender to match a competing offer before you go through a full refinance.

When I refinance, does my 30-year loan term start again?

This is one of the most common refinancing myths, and the honest answer is: only if you let it. A brand-new home loan is set up with a fresh 30-year term by default. But you are not required to accept that. Almost every lender will let you set the new loan's term to match however many years you have left on your existing loan, rather than resetting the clock.

For example, if you are seven years into a 30-year loan, you have 23 years remaining. When you refinance, your broker can set your loan term at 23 years instead of the default 30. The only reason to reset the loan back out to the original 30-year term is for cash flow purposes, as doing so provides lower repayments.

The trap is when this does not get raised. If nobody flags it, the new loan defaults to 30 years, your minimum repayment drops, and you end up paying more total interest over the life of the loan even at a lower rate — unless you consciously keep your repayments at the old, higher level. It is a five-minute conversation that can be worth thousands over the life of your loan, and it is one of the first things we check on every refinance file we run.

Other reasons to refinance

Cutting your rate isn't the only reason to refinance. Two more come up often:

• Cashflow relief. If keeping up with repayments across a car loan, credit card, home loan and personal loan is putting a strain on your cashflow, consolidating those loans into your home loan can be a good reason to refinance — several repayments, often at much higher rates, become one, at your home loan rate.
• Accessing equity. Now that you've owned your home for a while, you can leverage its value to release equity — funds you can put toward renovations, an investment opportunity, or anything else in your personal life. We work with 40+ lenders, and each one can use a different valuation method or valuer, so the figure one comes back with isn't always the figure another would. In some cases, checking more than one lender turns up a valuation higher than expected, which means more usable equity than you thought you had. We wouldn't say that happens every time — but it's exactly why it's worth exploring before you settle on a number.

Common questions