Refinancing in northern Brisbane: how a break-even analysis works, and when to stay put

Refinancing can lower your repayments or free up equity, but it only makes sense when the savings beat the costs. The tool we use to decide is a break-even analysis, and sometimes it tells us to advise you to stay put.

What is a break-even analysis?

A break-even analysis works out how many months it takes for the savings from a new loan to recover the cost of switching to it. If you save a certain amount each month but switching costs you several hundred to a few thousand dollars upfront, the break-even point is the month where you are finally in front. If you are likely to sell or refinance again before that point, switching may not be worth it.

What are the real costs of switching?

The headline rate is only part of the picture. A proper comparison includes:

• Discharge or release fees on your current loan.
• Application, settlement or valuation fees on the new loan.
• Government mortgage registration and deregistration fees.
• Lenders Mortgage Insurance again, if your equity is below 20 percent (LMI is generally not transferable between lenders).
• The effect of any annual package fee.

We map all of these against the genuine monthly saving so you see the full position, not just a lower advertised rate.

When should I not refinance?

When the numbers do not support it. If your break-even point is years away and you may move sooner, or if going below 20 percent equity would trigger a fresh LMI premium that wipes out the saving, staying put can be the better call. We say so plainly.

What else can refinancing do besides lower my rate?

Refinancing is also a tool for structure, not just price. It can consolidate debt, fund a renovation, or release equity for a next purchase without cross-collateralising your existing loan. For owners of character homes in suburbs like Grange, Wilston or Kedron, an equity release is often how a renovation gets funded cleanly.

If you want to know whether refinancing actually improves your position, start an assessment and we will run the numbers with you.