How the Home Loan Refinance Calculator Works (With a Worked Example)
Shows whether refinancing to a lower rate is worth the switching costs. This guide walks through what each input means, the formula behind the answer and a worked example using typical Australian figures. You can follow along in the free Home Loan Refinance Calculator.
Why it matters
Buying property in Australia involves a deposit, stamp duty, lender requirements such as the APRA serviceability buffer, and ongoing repayments that move with interest rates. Investors also weigh rental yield, negative gearing and capital gains tax.
What you need to enter
The calculator asks for 5 inputs. The table shows each one with the example value used later in this guide.
| Input | Example value |
|---|---|
| Loan balance ($) | 500000 |
| Current rate (%) | 6.5 |
| New rate (%) | 5.9 |
| Remaining term (years) | 25 |
| Switching costs ($) | 1500 |
The formula
Saving = current repayment − new repayment. Break-even = switching costs ÷ monthly saving.
Worked example
Entering the example values above gives these results:
| Result | Value |
|---|---|
| Monthly saving | $185.02 |
| Current repayment | $3,376.04 |
| New repayment | $3,191.01 |
| Break-even | 9 months |
| Saving over the term | $54,007.04 |
The headline figure is $185.02 (monthly saving). Change any input in the calculator and every result updates instantly, so you can test different scenarios side by side.
How the monthly saving changes with loan balance
The table below keeps every other input at the example value and moves only “Loan balance ($)” up and down by 10% and 20%. It shows how sensitive the monthly saving is to that one figure.
| Loan balance ($) | Monthly saving |
|---|---|
| 400,000 | $148.02 |
| 450,000 | $166.52 |
| 500,000 | $185.02 |
| 550,000 | $203.53 |
| 600,000 | $222.03 |
At 400,000 the result is $148.02; at 600,000 it is $222.03. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.
A practical tip
Ask your current lender for a rate cut first. A phone call is often enough to get a better deal.
Keep going
Before relying on the number, read Getting the Most From a Home Loan Refinance Calculator: Tips and Common Errors. You might also find these guides useful:
- Rent vs Buy Calculator: Formula, Example and What the Result Means
- Using a Rent Affordability Calculator in Australia: A Step-by-Step Guide
- Interest-Only vs Principal and Interest Calculator Explained for Australians
Frequently asked questions
- Do these calculators match what my bank will say?
- Lenders use their own models, expense benchmarks and policies. Use these results to prepare, then speak to a lender or broker.
- Are stamp duty rates current?
- Duty thresholds are indexed or changed regularly. Always confirm with your state revenue office before relying on a figure.
- Is this financial advice?
- No. The calculators give general estimates only and don’t consider your objectives or financial situation.
Run your own numbers in the Home Loan Refinance Calculator.
Open the calculatorGeneral information only. Rates and thresholds change, usually on 1 July. Confirm current figures with the ATO or the relevant authority, and get personal advice for decisions about your situation.