Should you refinance? Cashbacks, break-even and the catch

Refinancing can save you thousands — or quietly cost you money while feeling like a win. The marketing makes it hard to tell which: a tempting cashback here, a sharp-looking rate there. The only way to know is to run the actual maths on your loan.

Start with the real monthly saving

Compare the repayment on your current rate against the new one for the same balance and remaining term. The gap is your monthly saving. A rate drop of even 0.3–0.5% on a large balance can be meaningful — but only after you account for what it costs to switch.

Don't forget the switching costs

Leaving your current lender and setting up a new loan isn't free. Expect a discharge fee, state government discharge and registration fees, and sometimes an application, valuation or settlement fee — together typically several hundred to a couple of thousand dollars. Your break-even point is simply how many months of savings it takes to recover those costs. If you'll stay in the loan well beyond that, switching usually makes sense.

The cashback catch

A $2,000–$4,000 cashback is attractive, and it can genuinely offset switching costs. But it's a marketing hook — the lenders offering the biggest cashbacks often carry a higher ongoing rate than the sharpest no-cashback alternatives. On a large balance, a rate that's even 0.2% higher can erase a $3,000 cashback within a couple of years. Treat the cashback as a tie-breaker, never the deciding factor. The ongoing rate is what you live with for decades.

The things the calculator won't tell you

Numbers aside, refinancing resets your loan term unless you ask otherwise (which can quietly add years of interest), and switching is only worth it if you'll actually qualify — serviceability is reassessed at the new lender, and some borrowers find they're stuck where they are. Loan features matter too: a genuine offset account or free redraw can be worth more than a slightly lower rate. Get the structure right, not just the headline.