Refinance Home Loan Calculator

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How does the refinancing calculator work?

A mortgage refinancing calculator is a powerful tool that helps homeowners assess whether refinancing their home loan is a financially savvy move. Here's how it works:

1. Input your current loan information - To use a refinancing calculator, you'll need to provide information about your existing mortgage. This includes your current loan balance, loan type (e.g. fixed or variable), interest rate, remaining term, and repayment method (e.g. weekly, fortnightly, or monthly).

2. Enter refinancing details - Next, you'll input details about the new mortgage you're considering. This involves entering the expected interest rate, the new loan term, and any associated closing costs or fees.

3. Calculate the savings - Once you've entered all the relevant information, the calculator will crunch the numbers and provide you with a clear breakdown of your potential savings.

If the savings seem worth investigating, you can start comparing home loan products from a range of lenders with InfoChoice.

When should I refinance my mortgage?

Here are some key situations when refinancing your home loan might make sense:

• Save money (get a better deal)

• Your credit score has improved since you initially took out your mortgage

• You’re paying too much in fees

• Switch between loan types e.g. from a fixed-rate to a variable rate

• Access flexible features e.g. offset accounts, redraw facilities

• You want to shorten your loan term

• Your fixed-term is ending

• You’ve finished building

• Debt consolidation

• You’ve gone from low doc to full doc

• Equity release

How much can you save by refinancing your home loan?

Refinancing to a home loan with a lower interest rate can potentially save you thousands of dollars over the life of the loan. Consider the following example:

A homeowner wants to refinance their 30-year P&I (principal and interest). The current loan balance is $500,000, and their current interest rate is 5.50%. The current monthly repayments are $2,839.

The home loan product they’re looking to refinance to has a lower interest rate of 5%. The new monthly repayments would be 2,684 - a monthly saving of $155.

Over the entire loan, they could save almost $56,000 in interest costs and possibly pay off the loan 1 year and 8 months earlier.

Refinancing costs to be aware of

Before you refinance your home loan, make sure the savings outweigh the costs.

The process of refinancing can cost anywhere from a few hundred dollars to several thousand. Here are the common switching costs you may encounter:

• Mortgage application fee

• Early exit fee

• Break fee

• Valuation fee

• Discharge fee

• Settlement fee

• Mortgage registration fee

• Lenders Mortgage Insurance (LMI)

It might not also be worth it if you’re coming to the end of your loan term (because the savings won’t mitigate the upfront fees) the home loan balance is low (many lenders require at least $150,000), or you have less than 20% equity (LMI will be payable).