Most lenders don't charge an application fee when you refinance.
The confusion around refinancing costs usually comes from mixing up application fees with discharge fees, valuation costs, and settlement charges. When you refinance your home loan, your current lender charges a discharge fee to release the mortgage, typically between $150 and $400. Your new lender may order a valuation, which can cost $200 to $600 depending on the property. Some lenders waive their application fee as standard, while others charge between $200 and $600 but often negotiate it away during the application process.
In our experience working with Double Bay residents, the actual out-of-pocket cost to refinance sits between $500 and $1,500 when you add discharge fees, valuation costs, and any settlement charges together. Application fees specifically are rarely the issue.
What Counts as an Application Fee
An application fee is what a lender charges to assess your refinance application and prepare loan documents. This fee covers credit checks, income verification, and the administrative work involved in setting up your new loan. It appears on your loan offer as a separate line item, usually labelled as application fee, establishment fee, or upfront fee.
Some lenders still charge this fee but waive it during rate negotiations. Others never charge it at all. The fee itself doesn't reflect the quality of the loan or the level of service you'll receive. It's simply a revenue line for the lender, and whether you pay it often comes down to timing and negotiation rather than policy.
Discharge Fees From Your Current Lender
Your existing lender charges a discharge fee to remove their mortgage from the property title and finalise your account. This fee sits between $150 and $400 for most major lenders and appears on your final statement when you settle the new loan. You can't negotiate this fee, and it applies whether you're refinancing to a lower rate or accessing equity for another purpose.
Consider a Double Bay homeowner with a loan balance of $950,000 who refinances to reduce their variable interest rate. Their existing lender charges a $350 discharge fee, the new lender orders a $450 valuation, and settlement costs add another $200. The total upfront cost is $1,000, with no application fee charged by the new lender. Over the following 12 months, the lower rate saves $6,800 in interest, which offsets the refinance costs within six weeks.
Valuation Costs and When They Apply
Lenders typically require a valuation when you refinance, particularly if you're borrowing more than 80% of the property's current value or if the last valuation is more than 12 months old. The valuer assesses the property to confirm it supports the loan amount, and the cost ranges from $200 for a desktop valuation to $600 for a full inspection.
Some lenders cover the valuation cost as part of their refinance offer, while others pass it directly to you. Double Bay properties, particularly those near Steyne Park or close to the harbour, may require a full inspection rather than a desktop valuation due to their individual characteristics and higher values. This adds to the upfront cost but doesn't change the overall benefit if the rate reduction or feature improvement justifies the switch.
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Hidden Costs That Appear After You Apply
Some lenders add charges that don't appear in the initial conversation. A settlement fee might show up on the final disclosure, usually between $100 and $300. Legal fees for document preparation can add another $200 to $400 if you're using the lender's panel solicitor rather than your own. These aren't application fees, but they increase the total cost of refinancing and should be factored into your decision.
If your fixed rate period is ending and you're comparing options, ask each lender for a full breakdown of costs before you proceed. The lowest advertised rate doesn't always deliver the lowest overall cost once you account for valuation charges, settlement fees, and any other upfront costs that apply to your situation.
When Refinancing Still Makes Sense
Refinancing works financially when the interest savings over 12 to 24 months exceed the upfront costs. A rate reduction of 0.50% on a $900,000 loan saves roughly $4,500 per year in interest. If your refinance costs total $1,200, you recover that expense within four months and save money from that point forward.
Beyond the rate itself, some Double Bay homeowners refinance to access features their current loan doesn't offer, such as an offset account or the ability to make unlimited additional repayments without penalty. If your current lender restricts redraw or charges for extra repayments, switching to a loan with more flexibility can improve your cashflow and reduce the total interest you pay over the life of the loan. A loan health check can clarify whether your current loan still suits your circumstances or whether refinancing delivers a tangible benefit.
Call one of our team or book an appointment at a time that works for you to discuss your current loan and whether refinancing makes sense for your situation.
Frequently Asked Questions
Do most lenders charge an application fee when you refinance?
Most lenders either don't charge an application fee or waive it during the refinance process. The main costs you'll pay are discharge fees from your current lender, valuation costs, and settlement charges, which typically total between $500 and $1,500.
What is a discharge fee and can you avoid it?
A discharge fee is what your current lender charges to remove their mortgage from the property title when you refinance. It usually costs between $150 and $400, and you can't negotiate or avoid it.
When does refinancing make financial sense?
Refinancing makes sense when the interest savings over 12 to 24 months exceed the upfront costs. For example, a 0.50% rate reduction on a $900,000 loan saves roughly $4,500 per year, which easily offsets typical refinance costs of $500 to $1,500.
Why do some lenders require a property valuation when you refinance?
Lenders require a valuation to confirm the property supports the loan amount, particularly if you're borrowing more than 80% of the property's value or if the last valuation is more than 12 months old. Valuation costs range from $200 for a desktop valuation to $600 for a full inspection.
