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Refinance Break-Even Calculator

Compare your current home loan against a refinance offer on cumulative cash flows including switching costs, cashback timing and the residual balance.

AustraliaScheduled modelClass B · rule-based estimateNo statutory rules requiredMethodology
AUD
The refinance offer
AUD

These accrue interest in the new-loan scenario.

AUD

Counted only from its receipt date; review the lender's conditions yourself.

AUD

Enter both loans to compare cumulative cash flows with residual balances included. This comparison never uses repayments alone.

Summary

Both loans are run as full ledgers and compared on cumulative cash flow with residual balances included at the common horizon (§13.10). Repayments alone are never the comparison.

Working

  1. §13.5 payment: the scheduled repayment solves P = B·i ÷ (1 − (1 + i)^−n) from the balance B, the periodic rate i and the remaining periods n.
  2. §13.7 recurrence: each period: interest = accruing balance × i, then closing = opening + interest + fees − payment − extra repayment.
  3. §13.9 offset: interest accrues on max(0, balance − offset × effectiveness), floored at zero; offset cash is never a principal repayment.
  4. §12.5.8 reconciliation: the ledger identity is checked on every period. A reconciliation failure invalidates the result rather than warning about it.
  5. §13.10 economic position: cumulative payments and fees of each loan, net of upfront switching costs and any counted cashback, plus the residual-balance difference at the common horizon.

Assumptions

  • Interest accrues once per repayment period on the payment-period ledger. Daily accrual is not modelled at P0.
  • The first repayment falls on 1 October 2026; every date in the schedule follows from that and the repayment frequency.
  • The rate is held constant except where a dated rate-change event moves it.
  • Weekly, fortnightly and monthly frequencies use 52, 26 and 12 periods per year.

Limitations

  • Lender daily accrual, transaction timing, fee timing and rounding can differ from this model; compare the settings with your loan contract and statements.
  • Redraw availability, offset eligibility conditions, break costs and any lender fee that was not entered are not modelled.
  • Amounts beyond the entered term are not projected; a balance left unpaid at term is reported rather than extended.

Common questions

Is it worth refinancing a home loan?

The calculator answers that mechanically: it runs your current loan and the new offer as two full schedules and compares their cumulative cash flows, including switching costs, cashback and the residual balance left on each loan at the same horizon. The trade-off consists of a lower repayment stream on one side against the net switching cost and any change in remaining term on the other. It reports where those cumulative flows cross and the position at that horizon, and leaves the decision to you.

How is the refinance break-even point calculated?

The calculator builds a running cumulative difference between the two loans, period by period, and the break-even is the first date that difference turns positive and stays positive. Comparing a single repayment against the switching cost would miss this, because the two loans can have different terms and leave different balances outstanding. If the cumulative advantage crosses zero more than once, the result flags it and reports the first sustained crossing rather than the first touch.

What costs are included in a refinance comparison?

Switching costs you pay in cash, switching costs added to the new loan balance and any cashback are all entered separately, because they hit your position at different times and in different ways. Financed costs increase the balance interest is charged on for the rest of the term, while a cash cost is spent once. The result reports the net switching cost as upfront plus financed less cashback, alongside the repayment difference and the new loan's lifetime interest.

Why does the comparison include the loan balance and not just repayments?

Because a lower repayment achieved by extending the term leaves you owing more at any given date, and a comparison of repayments alone would score that as a gain. The calculator therefore reports an economic position at each horizon: cumulative cash plus the residual balance on each loan. The table breaks this into cash, residual and economic columns at two years, five years and the common horizon.

Does the calculator include break costs on a fixed rate?

Only if you enter them as a switching cost. The calculator holds no lender pricing and cannot look up your break fee, discharge fee or new lender's charges. Ask your current lender for a payout figure and enter it in the cash or financed switching cost field. The methodology page lists what is and is not modelled.

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