Mortgage Refinancing Guide for 2025

Refinancing your mortgage simply means moving your home loan to a new lender or restructuring it with your existing one. Done well, it can save thousands. Done poorly, it can lock you into worse terms or trigger unexpected costs.

When refinancing pays off

The strongest case is when the rate you can get elsewhere is meaningfully lower than your current one, your loan-to-value ratio is below 80%, and you plan to keep the loan with the new lender for at least the clawback period. A cash contribution from the new bank often covers legal and discharge costs.

When it doesn't

• You're partway through a fixed term — break fees can wipe out the saving.
• You'd extend the loan term significantly, increasing total interest.
• Your LVR is above 80%, where you'll get standard rather than sharp pricing.
• You're likely to sell or move banks again within the clawback period.

How to model the break-even

Add up every cost: break fee on any fixed portion, legal fees, valuation, discharge fee. Subtract any cash contribution. Divide the net cost by your monthly interest saving. That's how many months until you're ahead. Anything under 12 months is usually a clear win.

Negotiate before you switch

Take your competing offer back to your current lender. Banks routinely match or come close to keep good customers, and there are no legal or break costs involved.

Key takeaways

• Refinancing is most powerful at the end of a fixed term.
• Model total cost — break fees, legals, contributions — not headline rate.
• A clawback usually applies for three to four years.
• Always negotiate with your current lender before moving.

Compare current home loan rates on MoneyGuru, or read our 2025 rates guide before your next refix.