The real cost of switching home loan lenders

The costs Moneysmart lists

Moneysmart's page on switching home loans (updated 29 October 2026) names these costs:

Moneysmart gives no typical dollar amounts for these, and neither does this guide. Lenders set their own fees, so ask each one for the figure in writing. See home loan discharge fees for the exit side, and lenders mortgage insurance if your equity is under 20%.

Government fees can also apply when a mortgage is registered or released. These differ by state and territory, so check your state's land titles office and ask the new lender what it will pass on.

Fixed loans: the break cost

If you are on a fixed rate, the break fee can be the largest item. Moneysmart's glossary says the break fee "may be very high" and that, generally, the more interest rates have come down since you took on the fixed rate loan, the higher the break fee will be. Moneysmart's fixed versus variable page (updated 16 September 2026) says you may be charged a break fee if you switch, sell or pay off the loan early.

Ask your lender for the break cost as a dollar figure on a stated date, because it can change. If your fixed term ends soon, what happens when your fixed rate expires may show a cheaper time to move.

How to work out break-even months

The method has three steps:

1. Add up all one-off costs of the switch.
2. Work out the monthly saving: your current repayment minus the new repayment on the same balance and the same remaining term.
3. Divide the costs by the monthly saving.

Illustrative example, using round numbers and not a typical cost: if switching costs $1,200 in total and saves $100 a month, break-even is $1,200 divided by $100, which is 12 months. If you expect to sell or refinance again within a year, you gain nothing.

For scale, as at 2 Nov 2026 RateSonar's data shows a median standard owner-occupier variable rate of 6.74%. On a $600,000 loan over 30 years, taking 0.10 percentage points off that median saves about $477 a year, and a 0.25 point cut saves about $99 a month. These are RateSonar's arithmetic with the rate held constant, not offers. A small rate gap can take a long time to cover a large cost.

Moneysmart's mortgage switching calculator (updated 26 October 2026) takes up-front fees such as the early termination and application fees, and shows how long recovering the switching cost takes. It is an estimate and assumes rates stay fixed.

Compare more than the rate

• Compare the comparison rate as well as the advertised rate. See the comparison rate explained.
• Compare on the same term. Moneysmart advises that a longer new term can mean more interest overall.
• Check ongoing fees, offset and redraw features, and whether extra repayments are limited.

Start from home loan rates and put lenders side by side in compare rates. As at 2 Nov 2026, the lowest advertised standard owner-occupier variable rate in the data is 5.69% (Aaa Financial Corporation). That is an advertised rate for new customers who meet the lender's conditions, not what you will be offered.

Before you switch: what to ask

• What is my exact break fee, and on what date does the figure apply?
• What is my current lender's discharge fee, and are other settlement costs charged?
• Does the new lender charge an application fee, valuation fee or ongoing fee?
• Will I pay LMI again, and can I claim a partial refund on the old one?
• Will the new lender pass on government registration costs, and can I see them itemised?
• Would my current lender match a better rate? Use the call script. Moneysmart says this is quicker and cheaper than refinancing.