Everything You Need to Know About Refinancing Fees

Most lenders charge an application fee when you refinance, but the amount varies significantly and some waive it entirely.

The decision to refinance usually hinges on whether the interest rate savings outweigh the costs involved. Application fees sit at the centre of that calculation, yet they're often bundled with other charges in ways that make direct comparison difficult. Understanding what you're actually paying for, and when those fees genuinely reflect value, helps you make a decision that aligns with your financial goals rather than just responding to a rate you saw advertised.

What Application Fees Cover When You Refinance

Application fees typically range from $0 to around $700, though some lenders charge more. This fee covers the lender's cost of processing your application, which includes credit checks, income verification, and initial property valuation. Some lenders label this as an establishment fee or an upfront fee instead, but the function remains the same.

In our experience, the size of the application fee doesn't always correlate with the quality of the loan product. A lender charging $600 upfront might offer a higher ongoing rate than one charging nothing, which means the headline saving disappears within months. Consider a scenario where you're refinancing a $450,000 mortgage. One lender offers a rate 0.25% lower but charges a $600 application fee. Another charges no application fee but sits 0.15% higher on the rate. Over two years, the lower rate saves you roughly $2,100 in interest, even after accounting for the upfront cost. The fee becomes irrelevant when the rate difference compounds over time.

Some lenders advertise a $0 application fee but then charge higher ongoing fees or require a more expensive valuation. Always ask what the total upfront cost looks like, not just the application fee in isolation.

When Lenders Waive the Fee and Why It Matters

Many lenders waive application fees during promotional periods or for borrowers refinancing above a certain loan amount. The threshold varies, but we regularly see waivers for loans above $250,000 or $300,000, particularly when lenders are competing for market share.

These waivers aren't acts of generosity. Lenders recover the cost through other means, whether that's a slightly higher rate, ongoing account fees, or a valuation fee that sits outside the application cost. A waived fee is worth pursuing, but only if the overall loan structure suits your situation. If you're accessing equity to fund an investment property deposit, for example, the waiver might be tied to a package that includes features like an offset account, which could deliver ongoing value beyond the upfront saving.

If you're coming off a fixed rate and looking to refinance before the variable rate climbs further, ask whether the lender will waive the application fee as part of the switch. Many will, especially if your loan amount is substantial and your serviceability is strong.

Valuation Fees and How They Add to the Total Cost

Most lenders require a property valuation when you refinance, and this can cost anywhere from $0 to $400 depending on the lender's policy and the property type. Some lenders absorb the valuation cost if the application fee is charged, while others charge both separately.

Valuation fees become relevant when you're refinancing to access equity. If your property has increased in value since you took out the original loan, the lender needs an updated valuation to determine how much equity you can draw. In a market where property values have risen, this works in your favour. In a flat or declining market, the valuation might limit your borrowing capacity and the fee feels like an additional imposition.

A desktop valuation, where the lender uses automated data rather than sending a valuer to the property, is sometimes offered at a lower cost or no cost. This option works for straightforward suburban properties but might not be available for rural or unusual property types. If the lender insists on a full valuation and the fee is $300, factor that into your comparison alongside the application fee and any rate differences.

Discharge Fees from Your Current Lender

Your existing lender will charge a discharge fee when you refinance, typically between $150 and $400. This fee covers the administrative cost of closing your loan and removing the mortgage from the property title.

Discharge fees are unavoidable, but they're predictable. Your current lender's fee schedule will list the exact amount, so there's no reason to be caught off guard. If you're refinancing to consolidate debt or access a lower rate, the discharge fee is a one-off cost that sits alongside the new lender's application fee and valuation fee. Add them together to see the total upfront cost before comparing it to the interest savings over the period you expect to hold the new loan.

Some borrowers assume the new lender will cover the discharge fee as part of a refinancing package. Occasionally this happens, but it's not standard. If a lender offers to cover it, make sure the rate and ongoing fees don't offset the saving.

Ongoing Fees That Matter More Than the Upfront Cost

Application fees are visible and immediate, but ongoing account fees often cost more over the life of the loan. Annual package fees, monthly account-keeping fees, and offset account fees can add several hundred dollars per year, which compounds quickly.

If you're refinancing to improve cashflow or reduce loan costs, the ongoing fee structure deserves as much attention as the application fee. A loan with no application fee but a $395 annual package fee will cost you more than a loan with a $600 application fee and no ongoing fees if you hold it for more than two years. Run the numbers over the period you're likely to stay with the lender, not just the first year.

A loan health check can clarify whether your current loan structure is costing you more in ongoing fees than it should, and whether refinancing to a different product would deliver long-term savings even after accounting for upfront costs.

Rolling Fees into the Loan Amount

Most lenders allow you to add application fees, valuation fees, and other upfront costs to the loan amount rather than paying them out of pocket. This option appeals to borrowers who want to refinance without depleting their cash reserves, but it means you'll pay interest on those fees for the life of the loan.

Adding $1,000 in fees to a $400,000 loan might feel insignificant, but over 25 years that $1,000 costs you roughly $1,900 in additional interest, assuming a consistent rate around 6%. If you have the cash available and the fees won't strain your budget, paying them upfront reduces the total cost. If cash is tight or you're prioritising liquidity for another purpose, rolling the fees into the loan makes sense, but go in knowing the true cost.

For borrowers refinancing to access equity for an investment property, rolling the fees into the loan amount can preserve cash for the deposit on the next purchase. The additional interest cost becomes part of the broader investment strategy rather than a standalone expense.

How Application Fees Fit Into the Refinancing Decision

Application fees are one cost among many when you refinance, and they're rarely the deciding factor. A loan with a $700 application fee and a rate 0.30% lower than your current loan will save you thousands over two or three years, while a loan with no application fee and a rate only 0.10% lower might barely break even once you account for discharge fees and valuation costs.

The question isn't whether the application fee is low, but whether the total cost of refinancing delivers a meaningful benefit. If you're stuck on a high rate after your fixed rate period ended, the application fee becomes irrelevant when the rate saving is substantial. If you're refinancing to access equity or switch from a fixed rate to a variable rate with an offset account, the upfront fees should be weighed against the features and flexibility the new loan provides.

Call one of our team or book an appointment at a time that works for you. We'll compare the total cost of refinancing across lenders, not just the application fee, and show you which option aligns with what you're trying to achieve.

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