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How much does it cost to refinance your home loan?

Refinancing your home loan to take advantage of new features like a lower interest rate could save you money.

But, before you switch home loans, make sure that the benefits you receive outweigh the costs of refinancing.

Familiarising yourself with the refinancing process and how much you can expect it to cost can make the journey much easier and more worthwhile.

What are the costs involved with refinancing your home loan?

When comparing home loans with a view to refinance, one of the most important factors to consider is the cost involved. When you pay out your current mortgage with a new loan you could incur a number of upfront and ongoing costs. These costs will vary depending on your existing (and future) loan and lender and may include:

  • Establishment and application fees
    These are commonly upfront fees when you apply for a new loan and not all lenders will charge them
  • A loan service or maintenance fee
    You may have to pay annual or monthly fees on certain home loans
  • Break costs
    These might apply if you're on a fixed interest rate and you're refinancing before your fixed rate period ends
  • Switching fees
    You might incur these fees if you're refinancing with your current lender and switching to a different loan
  • Exit fees
    Most lenders will charge a fee if you close or pay out your current loan early
  • Additional features fees
    Adding an offset account, redraw facility and other features to your home loan can save you money in the long term but can come with fees
  • Lenders' Mortgage Insurance (LMI)
    You may have to pay LMI if you have less than approximately 20% equity in your home
  • Stamp duty
    Ask your lender if you will be liable for stamp duty when you refinance

Other legal, mortgage registration, and settlement costs may also arise when you refinance. This is why it's important to always check with your lender or an HSBC home loan specialist to find out what costs might be involved before you sign on the dotted line.

How much could you save in the end?

True, there are some fees associated with refinancing, but there are also a number of cost savings you can benefit from as well. For example, your new loan could:

  • Have lower or no annual fees
  • Have a lower rate
  • Offer cashback incentives
  • Have features such as additional repayments or offset which help you reduce your interest charges

Plus, many lenders will waive establishment and application fees when you make the switch.

Is the cost of refinancing worth it?

That will depend on your situation. Once you've made a shortlist of home loans that suit your new situation, you need to figure out all the costs involved. This will give you an idea of how much you stand to save – or pay. Working out how long it will take you to recover the costs of refinancing is another great way to know if it's right for you. 

You can use our repayment calculator to find out if refinancing would save you money. The calculator also considers any fees we charge upfront or ongoing.

Are you ready to refinance your home loan with HSBC?

Take a look at our home loan options to find the one that's right for you. Need more help? Speak to one of our home loan specialists.

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Next steps

You might also be interested in

A step-by-step guide to refinancing a home loan.
Learn more about the benefits of refinancing your home loan, and how to get started.
Find out the expected timeline for refinancing your home loan and what you can do to speed it up.

Important information

This article is intended to provide general information of an educational nature only. This information should not be relied upon as financial product advice as it does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of the information to your own circumstances and seek independent legal and financial advice prior to making any investment choice. There are risks associated with any investment and this document is not intended to list all of them in respect to any particular investment opportunity. Prices, levels and indications contained in this document are illustrative only and may not represent future performance. HSBC does not warrant or represent the performance of any investment opportunity. 

 

Disclaimer: Credit provided by HSBC Bank Australia ABN 48 006 434 162. AFSL/Australia Credit Licence 232595. Home Loan Terms (PDF), Personal Banking Booklet (PDF), Fees and Charges (PDF), and lending criteria apply. This article does not take into account your personal or financial situation. Please consider a relevant Product Disclosure Statement, available at hsbc.com.au or by calling 1300 308 008 before making a decision about this product.