A refinance comparison should show the cost of switching, the expected ongoing benefit and how long you expect to keep the loan. A lower advertised rate is useful only when the complete comparison works for your circumstances.
This guide gives Melbourne homeowners a practical way to prepare for a refinance conversation. It focuses on the calculation, rather than predicting rates or promising a particular saving.
Start with an itemised cost list
Moneysmart’s refinancing guidance recommends comparing costs before switching. Possible items include a discharge fee, new-loan application costs and a fixed-rate break cost. Lenders mortgage insurance may also affect the result when equity is limited. Ask for written figures and identify which amounts are estimates.
Use separate columns for your existing loan, a revised offer from the current lender and a new lender. Record the date of each offer. A comparison assembled from quotes collected at different times can be misleading if a rate or fee has changed.
Calculate a simple break-even point
Illustrative example: assume the total one-off switching cost is $2,400 and the estimated monthly benefit is $150 after differences in ongoing fees. The simple calculation is $2,400 ÷ $150 = 16 months.
If the same monthly benefit were only $100, recovery would take 24 months. If you sold or refinanced again after 12 months in the first example, the estimated $1,800 benefit would not have recovered the original $2,400 cost.
This is a screening calculation, not a full loan model. It assumes the monthly benefit stays constant and ignores changing balances, future rate movements and the time value of money. Confirm the comparison with an amortisation calculation and the lender’s actual terms.
Do not confuse repayment relief with interest savings
A new loan term can change the monthly repayment substantially. For a fair first comparison, ask for the new offer over the years remaining on your current loan. Moneysmart warns that a longer term can mean paying more interest. If a longer term is being considered for cash-flow reasons, request its total-cost comparison separately.
Five figures to bring to a review
- Your outstanding balance and remaining term.
- The current rate and minimum repayment.
- Any fixed-rate expiry date and a current break-cost quote.
- Annual or monthly fees and features you actually use.
- Your expected time in the property and any upcoming change to household income.
What if my existing lender offers a better rate?
Add that offer to the same comparison. It may change the benefit of moving elsewhere. Ask whether the revised offer has different fees, a temporary discount or changed features. Keep the decision tied to the written offer instead of a headline rate.
Does every refinance need to save money?
Cost is important, but borrowers may also be seeking a different feature or loan structure. Write down that objective and its cost so the trade-off is explicit. Approval is a separate question and remains subject to lender assessment.
Get a clearer refinance comparison
Read about our refinance service, then contact Absolut Financial with your current loan details. We can discuss the figures needed for a comparison. If access to savings matters, also read our offset and redraw guide.
If your property is in Malvern East, our Malvern East mortgage broker page sets out property and lender questions to bring to that conversation.
Information checked 29 September 2026. Examples are hypothetical and are not offers or guaranteed savings. This is general information, not advice tailored to your circumstances.