Should I Refinance?

August 26, 2016
Simon Allen

Refinancing can seem like a big decision. Many people feel an irrational loyalty to their bank, especially if they have used the same bank since they were a child. However, shopping around for your home loan can potentially generate big savings, especially since large exit fees have been banned (fixed interest loans are a special case – call us to discuss). To illustrate this, let’s look at a recent example of a refinance carried out by Mortgage Choice Camberwell.

A young couple had a loan of $445,000 with one of the big 4 banks. Their property was valued at $590,000. The home loan interest rate was 4.75%, meaning monthly repayments of $2321.

Mortgage Choice Camberwell reviewed options for them and identified which lenders would be suitable for a refinance. A smaller, online bank offered a rate of 3.88%, meaning monthly repayments of $2094.

In order to evaluate whether it is worthwhile switching, we need to review switching costs, the banks’ annual package fees and monthly repayments. Mortgage Choice Camberwell usually does this analysis over a 3 year period but this can be varied to suit individual circumstances.

In this example, the savings were really significant. A massive $7035 over 3 years.


Current Bank

Proposed Bank




Interest Rate






Monthly repayment






Exit fee from existing bank






Application fee for new lender






Annual package fee






Total cost over 3 years






Saving over 3 years




A discussion with Mortgage Choice Camberwell about refinancing options is cost-free and obligation-free. Call us on 03 9021 6904.

Posted in: Refinancing

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