When refinancing actually saves you money (and when it doesn't)

Refinancing is one of the most over-pitched and under-explained moves in personal finance. Almost every comparison site treats it as a rate-shopping exercise: cheaper rate, switch lender, done. In reality, the rate is the third or fourth thing that matters.

When refinancing genuinely saves money: (1) Your current rate is 0.5%+ above what a comparable lender would offer you today. (2) You're paying for features (offset, redraw, multiple splits) you don't use. (3) You've built equity and want to access it cleanly. (4) You're coming off a fixed rate and the revert rate is uncompetitive.

When it usually doesn't: (1) You'd switch from a fee-free loan to a packaged loan with a $400/yr annual fee for a 0.1% rate saving. (2) Your loan balance is under $250k; the absolute dollar saving rarely justifies the admin. (3) You'd reset a 25-year loan back to 30 years; the lifetime interest goes up, even at a lower rate.

Hidden costs to factor in: discharge fees ($350–$600), settlement and registration fees (~$400 total), valuation (often waived), and the time cost of getting your file ready. Net it all out before deciding.

Our rule of thumb: refinancing is worth it when the structural fit and net dollar saving over 24 months together beat the friction of moving. We model that for clients before recommending. If the answer is 'stay where you are and ask for a rate review,' we'll say that.