Refixing vs Refinancing Your Mortgage

📌 When to Refix

The Easy, Sensible Default

Refixing is the natural choice when your current bank is offering competitive rates, you are happy with their service, and you do not want the effort of switching. For most people, most of the time, a well-negotiated refix is perfectly good.

Always Negotiate Your Refix

Here is the part many people miss: the rate your bank first offers when you refix is often not its best. Banks frequently shave a margin off the advertised, or carded, rate if you ask, especially if you have a good record or mention you are considering other lenders. A short conversation can lower your rate for the whole term.

Choosing Your New Term

Refixing also means choosing how long to fix for. A shorter term lets you react sooner if rates fall, while a longer term gives certainty. Many people split their loan across more than one term so not all of it rolls over at once, smoothing the risk of refixing everything at a high point.

Use our Mortgage Calculator to compare repayments at different rates and terms, and the Breaking a Fixed Mortgage guide if you are mid-term.

💰 When to Refinance

Reasons to Move Banks

• A clearly better rate: If another lender is meaningfully cheaper and your bank will not match it, switching can save real money.
• Cash contributions: New banks often pay a cash contribution, sometimes a few thousand dollars, to win your mortgage. This can more than cover the switching costs.
• Better structure or features: You might want an offset account, revolving credit, or different flexibility your current bank does not offer well.
• Poor service: Sometimes the reason is simply that you are unhappy with your bank.

The Costs and the Catches

Refinancing is not free. You will usually pay legal fees to discharge the old mortgage and register the new one. If you break a fixed term early to switch, a break fee may apply when wholesale rates have fallen. And the cash contribution comes with a clawback condition.

Do the Maths

The right call is whichever leaves you better off after all costs. Add up the savings from a lower rate over the term, plus any cash contribution, then subtract legal fees and any break fee. If you are clearly ahead, refinancing makes sense; if it is marginal, refixing and negotiating may be simpler and just as good.

✅ Common Mistakes and What to Do

Mistake 1: Taking the First Refix Rate

The trap: Clicking accept on the bank's first offer without asking for better.

Why it costs: The carded rate is often not the best the bank will do. A quick negotiation can lower it, saving money on every repayment for the term.

Mistake 2: Switching for Cash, Then Paying It Back

The trap: Chasing a cash contribution and refinancing again before the clawback period ends.

Why it costs: You have to repay the contribution if you leave too soon, wiping out the gain and the effort. Only switch when you plan to stay.

Mistake 3: Ignoring Break Fees

The trap: Refinancing mid-fixed-term without checking the break fee.

Why it costs: A break fee can be large when wholesale rates have dropped, easily swallowing the savings. Get the figure before you commit.

Mistake 4: Letting It Roll to Floating by Default

The trap: Doing nothing, so the loan drops onto the higher floating rate when the fixed term ends.

Why it costs: Floating rates are usually higher than fixed. Letting it default there, even briefly, costs more than actively refixing.

A Simple Action Plan

Where to Go Next

Use the Mortgage Calculator to compare scenarios, the Mortgage Repayment Calculator for repayments, and the Breaking a Fixed Mortgage guide for break fees.

Final word: Refixing keeps you with your bank on a new rate, quick and free, while refinancing moves you to a new lender for a better deal, cash contribution or features, at some cost and effort. Always negotiate your refix, do the full maths before refinancing, watch break fees and clawbacks, and never let your loan drift onto floating by default. A little attention each time a term rolls over keeps your mortgage working hard for you. This is general information, not personalised lending advice, so talk to a mortgage adviser for your own situation.