Understanding the Basics of Refinancing Application Fees

What You Pay Upfront When You Refinance

Most lenders charge an application fee when you refinance, though the amount varies and some waive it entirely. Application fees typically sit between $300 and $600, though you will also see establishment fees, valuation fees, settlement fees and discharge fees from your current lender. The total upfront cost to switch lenders usually lands between $600 and $1,500 depending on who you move to and how your current lender structures their exit charges.

A FIFO worker earning solid income on a fortnight on, fortnight off roster in the Bowen Basin might be paying 6.2% on a variable rate with their current lender when comparable products elsewhere sit closer to 5.8%. On a $450,000 loan amount, that difference costs roughly $150 a month. If refinancing costs $1,200 upfront, the saving pays for itself in eight months. After that, you are ahead every month for as long as the rate gap holds.

Not every lender charges the same way. Some roll all the upfront work into a single application fee. Others break it out into separate line items for valuation, settlement and documentation. A few lenders waive the application fee entirely as part of a refinance campaign, though you will still face discharge fees from your existing lender and potentially a valuation cost with the new one. Discharge fees usually run between $150 and $400. Valuation fees depend on property type and location but commonly sit around $200 to $300 for a standard house.

How Lenders Structure Exit and Entry Costs

Your current lender charges a discharge fee to release the mortgage over your property. That fee is non-negotiable and will appear on your settlement statement regardless of where you move to. The new lender then charges their own set of entry costs, which might include an application fee, a settlement fee, and the cost of the valuation they order to confirm your property is worth what you say it is.

Some lenders advertise zero application fees but recover the cost elsewhere. Others genuinely waive the fee because they are confident the loan will remain on their books long enough to justify the upfront expense. If you are comparing two lenders and one charges $600 upfront while the other charges nothing, look at the interest rate and features before assuming the zero-fee option is the winner. A lender waiving fees but charging 0.15% more on the rate will cost you more over 12 months than the one with the $600 fee and the lower rate.

Another cost that catches people out is the valuation. The new lender will order a valuation to confirm your property is worth what you have told them. If you are refinancing a house in Mackay or Townsville, the valuer will look at recent sales in your suburb and provide a figure to the lender. If that figure comes in lower than expected, your loan-to-value ratio shifts and you might end up borrowing less than planned or needing to pay lenders mortgage insurance if the LVR crosses 80%. The valuation fee is usually payable upfront or added to your loan balance at settlement.

Some lenders offer desktop valuations or automated valuation models for straightforward properties, which can reduce the cost or remove it entirely. If your property is in a well-transacted suburb with plenty of comparable sales, a desktop valuation is more likely. If it sits on acreage or in a location with limited sales data, expect a full valuation with a site visit.

When Refinancing Costs More Than You Save

Refinancing does not always make financial sense, particularly if you are coming off a fixed rate and face break costs. Fixed rate break costs apply when you exit a fixed loan before the term ends, and they can run into thousands of dollars if rates have fallen since you locked in. Those costs sit on top of the standard application and discharge fees, and they can wipe out any saving you would make by moving to a lower rate.

Consider a Queensland FIFO worker who fixed at 5.5% two years ago when variable rates were sitting around 6%. Rates have since dropped and comparable variable products are now at 5.9%. The worker wants to switch to access an offset account, which their current fixed loan does not offer. The lender calculates break costs based on the difference between the fixed rate and the wholesale rate the lender can now earn on that money for the remaining term. If the fixed term has 18 months left and wholesale rates have dropped significantly, break costs could easily exceed $5,000. In that scenario, waiting until the fixed term ends usually costs less than breaking early, even if the new loan has useful features.

If your fixed rate period is ending within the next three to six months, most lenders will let you apply to refinance your home loan and lock in settlement for a date after the fixed term expires. That way you avoid break costs entirely while still securing the new rate and features before your current loan reverts to a higher variable rate.

Another situation where refinancing costs outweigh the benefit is when the rate difference is small and you plan to pay the loan down quickly. If you are six years into a 30-year loan and making extra repayments that will clear the balance in another four years, a rate difference of 0.2% might only save you $1,500 over that period. If refinancing costs $1,200 upfront, the net benefit is $300 spread across four years. At that point, the time and effort involved might not justify the move unless you are also gaining access to features that improve cash flow or flexibility.

Application Fees You Can Negotiate or Avoid

Some lenders will negotiate on application fees if you ask, particularly if you are bringing a large loan balance or moving multiple loans across. A broker working with FIFO clients regularly sees lenders waive or reduce fees to secure the business, especially if the loan amount sits above $500,000 or if you are consolidating debt as part of the refinance.

Packaged home loans, where you bundle your mortgage with a transaction account and credit card, sometimes come with reduced or waived application fees as part of an annual package fee. The package fee itself might run $300 to $400 a year, but if it includes fee waivers, rate discounts and fee-free transaction accounts, the overall cost can still be lower than an unpackaged loan with standard fees.

If you are accessing equity as part of the refinance to fund an investment, buy a ute, or consolidate other debts, the total loan amount increases and lenders sometimes structure the deal as a new loan rather than a straight refinance. That can change the fee structure, so confirm upfront whether the fees quoted are final or subject to change once the loan amount is finalised.

What Happens After You Pay the Fees

Once you have paid the application fee and any other upfront costs, the lender orders the valuation and starts processing your application. For home loans for Queensland FIFO workers, lenders will verify your income using payslips, contracts and sometimes a letter from your employer confirming your roster and allowances. If your income includes shift allowances, overtime or site allowances, the lender will shade that income according to their policy. Suncorp shades non-essential services overtime and allowances to 80% where you have earned them continuously for six months or more. That shading affects how much you can borrow, even though your actual income might be higher.

Settlement usually takes four to six weeks from application, though it can stretch longer if the valuation is delayed or if there are issues with your current lender releasing the title. Your new lender will book a settlement date, and on that day they pay out your existing loan and register the new mortgage. Discharge fees from your old lender and settlement fees from your new lender are both deducted at settlement, so you will see those amounts on your settlement statement even though you paid the application fee weeks earlier.

If you are refinancing an investment property, the application fees, valuation fees and other refinancing costs are generally tax-deductible over five years. That does not reduce the upfront cost, but it does reduce the after-tax cost if you are holding the property as an investment. For owner-occupied properties, the fees are not deductible.

Call one of our team or book an appointment at a time that works for you. We work with lenders who understand FIFO income and can walk you through the actual cost of switching, including any fees you might be able to reduce or avoid.

Frequently Asked Questions