Unlock the secrets to knowing if your rate is high

Your current rate might look high compared to advertised rates online, but whether it actually costs you depends on what you could realistically access and what it would cost to switch.

The question isn't whether lower rates exist. They always do. The question is whether the rate you could actually qualify for today, after accounting for refinance costs and the time involved, leaves you meaningfully ahead over the period you plan to hold the loan.

How Your Rate Compares to What Lenders Offer Now

Your rate sits high if it exceeds what you could access today by more than 0.20% to 0.30% and you have enough equity and servicing to refinance to a new lender. Advertised rates target borrowers with at least 20% equity, consistent income, and clean credit. If your situation has changed since you last borrowed, or if you took your loan during a period when lenders priced more conservatively, the gap between your rate and the market rate might not reflect what you could access now.

Consider a property owner in Norwood with a $450,000 loan and a current variable rate sitting around 6.50%. Advertised variable rates for owner-occupiers with 20% equity might sit closer to 6.00% to 6.20%. That looks like a 0.30% to 0.50% gap. If they refinanced and held the lower rate for three years, the interest saved would likely cover discharge fees, application costs, and any valuation shortfall, leaving them ahead. But if their loan-to-value ratio now exceeds 80% because their property value in Norwood has softened slightly, or if their income mix includes variable commission, some lenders would price them at 6.30% to 6.40% rather than the advertised 6.00%. The gap shrinks, and the case for switching becomes less clear.

What Refinancing Actually Costs You

Refinancing typically costs $600 to $1,200 in discharge and application fees, plus another $300 to $500 for valuation if required. If you hold a fixed rate and exit early, break costs can add several thousand dollars depending on how far rates have moved since you locked in. Those costs need to be recovered through interest rate reduction over the time you plan to hold the loan.

If you could drop your rate by 0.40% on a $400,000 loan, you would save roughly $1,600 in interest per year. Over two years, that covers typical refinance costs. Over three years, you move into genuine savings. But if the rate gap sits closer to 0.15%, or if you plan to sell or release equity within 18 months, refinancing might cost more than it saves.

When Staying Put Makes More Sense

Staying with your current lender makes sense if your rate sits within 0.20% of what you could access elsewhere, if you plan to sell or restructure within two years, or if refinancing would trigger break costs that exceed three years of projected interest savings. It also makes sense if your circumstances have shifted in a way that limits your appeal to other lenders, such as a move to self-employment, a recent credit default, or a loan-to-value ratio that now exceeds 80%.

In our experience working with clients around Unley and Prospect, borrowers who took loans in the months following rate rises often carry higher rates because lenders were pricing cautiously during that period. But if those borrowers have since reduced their loan balance or improved their equity position, they may now qualify for lower pricing without needing to switch lenders. A loan health check can confirm whether your current lender would adjust your rate if you asked, or whether switching gives you access to pricing they won't match.

Fixed Rate Holders and Timing

If you hold a fixed rate, your rate might look high relative to current variable rates, but breaking early usually only makes sense if the difference exceeds 0.80% to 1.00% and you have at least two years remaining. Break costs reflect the gap between the rate you locked in and the rate the lender can now earn by lending that money elsewhere. When fixed rates were rising, break costs were low or zero. Now that fixed rates have softened, break costs have reappeared.

A client holding a three-year fixed rate at 5.80% with 18 months remaining might see current fixed rates sitting at 5.40%. The rate gap is 0.40%, but the break cost might sit at $4,000 to $6,000 depending on the lender's calculation method. It would take three to four years of lower repayments to recover that cost. If they plan to hold the property long-term, it might still make sense. If they expect to sell or refinance again within two years, it won't. Our page on fixed rate expiry walks through what happens when your term ends and how to prepare.

What a Mortgage Broker Can Access That You Can't

Lenders adjust pricing based on loan size, loan-to-value ratio, property type, and borrower profile. A broker can identify which lenders price your scenario favourably and which apply loadings that make their advertised rate irrelevant to you. They also know which lenders waive application fees, which accept alternative income verification, and which move quickly when timing matters.

For property investors around Adelaide, particularly those holding multiple loans or managing investment loan refinancing, rate stacking becomes an issue. Your third or fourth loan might carry a higher rate than your first, even with the same lender. A broker can structure your refinance to consolidate loans where it makes sense, or split them across lenders to access lower pricing on each.

Call one of our team or book an appointment at a time that works for you. We will confirm what you could access today, calculate whether switching leaves you ahead after costs, and walk you through the steps if refinancing makes sense for your situation in Adelaide.

Frequently Asked Questions