Quick answer: Potentially. Compare the old payout, remaining term and exit costs with the new offered rate, establishment fees and term. A lower rate is useful only if the saving survives the fees and you do not reset the debt over much longer.
A recent Australian borrower framed the question almost perfectly: 15.99% fixed versus 13.5% variable, $50 per fortnight saving, but what happens to the old loan and the fixed-rate payout fee?
That is how refinance should be analysed.
Step 1: get today's payout figure
Do not use the app balance. Ask the existing lender for a payout valid to a date, including any early termination cost.
Step 2: compare the remaining term
If 28 months remain, first compare a new loan over roughly 28 months.
Restarting the balance over five years can manufacture a lower monthly repayment while increasing total interest.
Step 3: calculate the break-even point
Total switching costs ÷ monthly saving = break-even months.
If the break-even is 10 months and you intend to pay the loan out in six, refinancing probably fails on price.
Step 4: variable versus fixed is secondary
The new rate type matters, but the core question is total expected cost and repayment flexibility.
New job complication
Another real borrower wanted to refinance from 16.99% after starting a higher-paid job less than three months earlier. A better financial position does not mean every lender will accept the new tenure. Policy matching matters before another enquiry.
General information only. Approval, pricing, fees and eligibility depend on the lender, borrower circumstances and contract.
Frequently asked questions
How much lower should the rate be?
There is no universal percentage; calculate the dollar saving after fees and term.
Does the new lender pay the old loan?
Often a refinance uses a controlled payout, but the exact process varies by lender.
Should I switch fixed to variable?
Only after comparing rate risk, flexibility, exit fees and total cost.
Can a new job affect refinancing?
Yes, some lenders have employment-tenure rules.
Does refinancing create another enquiry?
A formal application can create a new credit enquiry.
Sources and verification
- Moneysmart — Personal loans
- Moneysmart — Debt consolidation and refinancing
- ASIC — Responsible lending
Related GPS Finance resources
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