A lower rate is worth considering when the overall benefit outweighs the cost of switching. Compare the same remaining term, the same repayment type, upfront and ongoing fees, and the features you actually use. A smaller monthly repayment is not the whole answer.

If you’re self-employed and your home loan started low doc with a non-bank, the first step is to check whether a refinance option is available. The next step is to check whether it improves your position after costs.

Which costs should I check?

• Leaving the current lender: discharge or administration charges, fixed-rate break costs where applicable, and any other exit costs under your contract.

• Starting the new loan: application or establishment charges, valuation, legal or settlement charges and relevant mortgage registration costs.

• Borrowing costs: any lender’s mortgage insurance or risk fees that apply to the proposed loan.

• Ongoing features: annual package fees, account charges and the cost or availability of an offset or redraw facility.

Ask for written amounts for your own loan. There is no single switching fee that applies to every refinance, and a lender-paid valuation or waived fee should be confirmed for the specific offer.

Compare the term before comparing the repayment

A loan with 25 years left should first be compared with a new loan over 25 years. Restarting at 30 years may create extra repayment relief, but it changes the comparison and can increase the period over which interest is paid.

Also keep principal-and-interest and interest-only comparisons separate. An interest-only repayment does not reduce the principal in the same way.

Hypothetical plumber: from 7.84% to 6.29%

Ben has a $600,000 principal-and-interest home loan with 25 years remaining. His current non-bank loan is at 7.84% p.a. Assume he qualifies for a refinance at 6.29% p.a., keeps the same remaining term and does not add fees to the balance.

• Current monthly repayment: approximately $4,567.

• New monthly repayment: approximately $3,973.

• Monthly repayment reduction: approximately $595, calculated before rounding.

These are illustrative calculations using monthly repayments and unchanged rates. The 6.29% rate is not a current advertised offer or a guaranteed outcome. Actual lender calculations, fees, features and rate changes can alter the result.

How long could it take to recover switching costs?

Assume Ben’s quoted upfront switching costs total $1,800, paid separately, and there is no difference in ongoing fees. Dividing $1,800 by the approximate $595 monthly repayment reduction gives about 3.0 months, or roughly four whole monthly repayment reductions to exceed those costs.

This is a simple cash-flow payback illustration. It is not a calculation of the exact interest break-even point or lifetime saving. To assess total financial benefit, compare interest, fees and the remaining loan balance over the period you expect to keep the loan. If fees are added to the loan, recalculate using the higher balance.

Three options to compare

1. Stay: what does your current loan cost over your expected holding period?

2. Ask for a better deal: can the current lender reduce the rate without switching costs?

3. Refinance: does the new loan improve the overall cost and features after fees?

A useful review should make these choices clear. Consider whether you need an offset, how access to redraw works and whether any extra flexibility is worth a fee.

Make the next step a review

Read how Easy Refi may help eligible self-employed borrowers and use the 12-month loan statement checklist to prepare. Then ask Matthew to review your home-loan options.

For independent information and a switching calculator, visit ASIC Moneysmart’s switching home loans guide.

Frequently asked questions

Is a lower repayment the same as an interest saving?

No. A repayment includes principal and interest. A longer term can lower repayments while increasing total interest. Compare fees, loan term and the remaining balance as well.

Can I add switching fees to the new loan?

Some lenders may allow eligible costs to be financed, subject to assessment. This increases the amount borrowed and can add interest, so compare it with paying fees upfront.

Is 6.29% a rate Fetch guarantees?

No. The rates used here are hypothetical examples, not current offers. Pricing depends on lender criteria, loan features and the borrower’s circumstances.

Ask Matthew to review my options

Explore Easy Refi, call Matthew on 0423 237 242 or email Matthew. Start with your current lender, approximate balance and rate, then arrange a suitable way to provide statements.

General information only. Eligibility, documentation, rates and lending criteria vary. Fees and loan terms affect the overall benefit. Any refinance is subject to lender assessment and approval. Examples are hypothetical and are not a recommendation to refinance.