How to make sure refinancing your mortgage saves you money

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There are several reasons to refinance your home loan. Unlocking equity to purchase a property investment or fund renovations, changing the structure of your mortgage and consolidating debt are just a few. 

But the most common reason is to save money by locking in a better rate, lower fees and a more suitable mortgage. Unfortunately when many homeowners refinance, they don’t look at the fine print and the change ends up costing them even more. Don’t make the same mistake. 

Know the costs before you commit (look beyond the rate)

Before you refinance, make sure you know what it’ll cost you. You’ll have to consider:

  • Fees charged by your existing bank if you break a fixed-rate mortgage. 
  • Fees charged by the new bank to arrange and administer your mortgage. 
  • Legal fees for registering the new mortgage. 

Break fees can often cost you thousands of dollars but these are sometimes covered by your new bank in order to secure your business. Fees charged by your new bank may include application and administration charges, but usually, these are reasonably low.

You’ll also want to watch out for other fees charged throughout the life of the loan. Look at the comparison rate (which includes upfront and monthly fees) rather than just the interest rate.

Figure out when you’ll break even

Once you know what the total cost of refinancing will be, calculate how much you’ll save each month including all fees. Next, do your sums:

Total cost of refinancing / monthly savings = Number of months it’ll take to break even.

For example, if refinancing costs you $2,000 and you save $200 a month, it’ll take you 10 months to break even. 

Now you know how many months it’ll take you to recoup the costs of refinancing your loan you need to have a think. Will you stay in your home for longer than that period of time? How much are you likely to save in total? Is it worth the cost and trouble?

Shop around and speak to the experts

Don’t just go with your existing lender or bank because it’s easy. If you’re refinancing to save money, you need to shop around several lenders to make sure you’re getting a great deal.  It’ll also be helpful to get an expert to help you pick a mortgage and weigh up your options.


To help you do that, we’ll get to know you and your financial situation first, then help you weigh up your options and choose the best option for your situation. Or if you’re better off just sticking with your current loan, we’ll let you know so that you don’t waste your time (or money). Get in touch with the team here at Money Empire to make sure refinancing saves you money as it should.

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