Refinance

Refinancing means closing out your existing loan and opening a new one - either with a different lender or a different product at the same lender. People refinance to drop their interest rate, switch from IO to P&I (or back), unlock equity for the next deposit, consolidate debt, or escape a lender they've outgrown. Costs include the discharge fee from the old lender ($150-$400), new lender setup fees, valuation, and re-registration of mortgages. Break costs apply if you refinance out of a fixed-rate term early - these can run into the thousands. The break-even is typically 12-18 months in lower repayments, so it's worth modelling before pulling the trigger.