Remortgage Cost Calculator
Remortgaging sounds simple: switch your home loan to a better deal, save money, maybe even unlock cash from your property. But under that shiny surface? A lot can go wrong. If you’re thinking about remortgaging in 2025, you need to know the real risks-not the brochures, not the calculator tools, not the agent pushing you to act now. This isn’t just about finding a lower interest rate. It’s about avoiding traps that could cost you thousands-or your home.
Early Repayment Charges Can Eat Your Savings
Most people don’t realize their current mortgage might still have an early repayment charge (ERC). These are penalties for paying off your loan before the deal ends. They’re usually a percentage of what you still owe, and they can hit hard. If you’re on a 2-year fixed rate that ends in six months, you’re probably fine. But if you’re on a 5-year fixed and you’re only three years in? You could be looking at 3% to 5% of your outstanding balance. On a $500,000 mortgage, that’s $15,000 to $25,000 just to switch. That’s more than most people save in a year on lower rates.One client in Sydney remortgaged thinking she’d save $800 a month. Her ERC was $18,000. It took her 22 months just to break even. By then, the new deal had already reset to a higher standard variable rate. She ended up worse off.
Your New Rate Might Not Be as Good as It Looks
Advertised remortgage deals are often teaser rates. The low rate you see? It’s usually only for the first 12 to 24 months. After that, it rolls into the lender’s standard variable rate (SVR)-and SVRs are rarely cheap. In 2025, many SVRs are hovering around 7.5% to 8.5% in Australia. That’s up from 4% just a few years ago.Don’t assume your new deal is better just because the monthly payment looks lower. Look at the full term. Use a repayment calculator and compare the total cost over five years, not just the first year. One study from the Australian Securities and Investments Commission found that 42% of people who remortgaged in 2023 ended up paying more over time because they didn’t look past the initial rate.
Valuation and Legal Fees Add Up Fast
Remortgaging isn’t free. Even if your new lender offers ‘free valuation’ or ‘no legal fees’, you’re still likely to pay for:- Property valuation (often $300-$600)
- Conveyancing or legal fees ($1,200-$2,500)
- Application or arrangement fees ($1,000-$3,000)
- Break fees from your current lender (if ERC applies)
That’s $3,000 to $7,000 upfront. If you’re only saving $200 a month on your repayments, it’ll take you 15 to 35 months just to get back to even. And if interest rates rise again before then? You’re stuck.
You Might Not Qualify for the Deal You Want
Lenders aren’t just handing out low rates anymore. Since 2022, lending rules have tightened. If your income has dropped, you’ve had a gap in employment, or your credit score slipped-even slightly-you could be turned down. Or worse, you get approved, but only for a much smaller loan amount than you expected.One homeowner in Parramatta applied to remortgage for $600,000 to pay off credit card debt. The lender approved only $480,000 because her debt-to-income ratio was too high. She couldn’t cover her existing debts and ended up with a higher monthly payment than before.
Don’t assume you’ll get the same loan amount. Get a pre-assessment from your new lender before you cancel your current one. And check your credit report for errors-lenders use this more strictly now than ever.
Extending Your Loan Term Could Cost More Long-Term
Some people remortgage to lower their monthly payments by stretching the loan over more years. Sounds smart, right? But here’s the catch: you’re paying interest for longer. If you had 10 years left on a 30-year mortgage and you reset it to a new 30-year term, you’re adding a decade of payments.Let’s say you owe $400,000 at 5.5%. You have 10 years left. Your monthly payment is about $4,300. You remortgage to a 30-year term at 6.5%. Your new payment drops to $2,500. Looks great. But over the full term, you’ll pay $1.1 million in total. If you’d kept the original, you’d have paid just $516,000. That’s a $584,000 difference. You saved $1,800 a month now-but lost nearly $600,000 over time.
Equity Could Be Lower Than You Think
If you’re remortgaging to release equity-say, to pay for renovations or a car-you might be overestimating your home’s value. Property markets change fast. In 2024, Sydney saw price drops of up to 12% in some suburbs. If you thought your home was worth $900,000 but the lender’s valuation comes in at $780,000, you lose $120,000 in available equity.Some lenders will only lend up to 80% of the property’s value. If you’re already at 75% loan-to-value (LTV), you’ve got almost no room to borrow more. And if your home’s value dropped? You could end up in negative equity-owing more than your house is worth. That makes selling or refinancing later nearly impossible.
Switching Lenders Can Hurt Your Credit Score
Every time you apply for a new mortgage, the lender runs a hard credit check. Multiple checks in a short time can ding your score. And if you get declined, that rejection stays on your file for 12 months. That makes it harder to get approved for anything else-credit cards, car loans, even mobile plans.Also, lenders look at your credit history over the past 24 months. If you’ve missed a payment, maxed out a credit card, or taken out a personal loan recently, your remortgage application could be rejected-even if your income is solid.
You Might Lose Mortgage Insurance or Benefits
Some lenders bundle perks with their mortgages: free life insurance, payment holidays, offset accounts, or fee waivers. When you remortgage, you lose those. The new lender might offer something similar-but not always. And if you switch to a lender without an offset account, you could end up paying thousands more in interest over time.One woman in Bondi switched to a ‘better rate’ but lost her offset account. Her savings account was linked to her old mortgage, reducing her interest by $400 a month. The new lender didn’t offer it. She ended up paying $5,000 more in interest the first year.
Timing Is Everything-And It’s Hard to Predict
Interest rates are still volatile in 2025. The RBA has signaled possible cuts later this year, but no one’s sure when. If you remortgage now and rates drop in six months, you’re stuck with your new deal. You can’t switch again without paying another ERC. If you wait too long and rates rise, you miss your chance.There’s no perfect time. But if you’re not saving at least $300 a month after all fees, and you’re not planning to stay in the home for at least 5 years, it’s probably not worth it.
What to Do Instead
Before you apply to remortgage, ask yourself:- How much will I pay in fees and ERCs?
- What’s the real cost over the next 5 years, not just the first year?
- Will I still qualify if my income changed?
- Am I extending my loan term just to lower the payment?
- What benefits am I losing?
Get a free, no-obligation review from a mortgage broker who’s not paid by commission. Ask them to run the numbers for you over a 5-year horizon. Don’t let emotion or urgency drive the decision. Remortgaging isn’t a quick fix. It’s a long-term financial move. Do it right-or don’t do it at all.
Is it ever a good idea to remortgage?
Yes-but only if you’re saving enough to cover all fees within 2 years and you plan to stay in the home for at least 5 years. You should also have a stable income, good credit, and a clear reason for switching-like locking in a fixed rate before expected rate hikes. If you’re just chasing a lower monthly payment without a long-term plan, you’re likely making things worse.
Can I remortgage with bad credit?
It’s possible, but your options will be limited and expensive. Lenders who accept bad credit often charge higher interest rates, bigger fees, and require larger deposits. You might end up paying more than you did before. Focus on improving your credit score first-pay down debts, fix errors on your report, and wait at least 6 months before applying. A 50-point score increase can save you thousands over the life of your loan.
How long should I wait before remortgaging again?
Wait at least 2 to 3 years after your last remortgage. Most fixed-rate deals have early repayment charges for the first 3 to 5 years. Switching too soon means you’ll pay penalties that wipe out any savings. Even if you’re on a variable rate, frequent switching looks risky to lenders and can hurt your credit score. Think long-term: aim to remortgage once every 4 to 5 years, not every 12 months.
Do I need a deposit to remortgage?
No, you don’t need a cash deposit. But you do need equity-usually at least 20% of your home’s value. If you have 15% equity or less, lenders may refuse you or charge higher rates. If your home’s value has dropped since you bought it, you might not have enough equity even if you’ve paid down your loan. Always get a current valuation before applying.
What’s the biggest mistake people make when remortgaging?
They focus only on the monthly payment. The biggest mistake is ignoring the total cost over time. A lower payment today might mean paying $100,000 more in interest over 20 years. Always compare the full repayment schedule, not just the first year’s payment. And never forget the fees, ERCs, and lost benefits. The cheapest monthly payment isn’t always the best deal.
If you’re considering remortgaging, don’t rush. The biggest risk isn’t the interest rate-it’s making a decision without understanding the full picture. Take your time, get the numbers right, and remember: your home isn’t just an asset. It’s your security.