Refinancing Offers: How Smart Brokers Compare More Than Cashbacks

Refinancing offers are everywhere right now – sharp “from” rates, glossy cashbacks, even frequent‑flyer points.

But a refinance only makes sense if, after all fees, revert rates and risks, you’re clearly better off and better prepared for the next few years.

This is exactly how a good broker thinks. We don’t start with “Who’s got the biggest cashback?” We start with: “Over the life of this loan, in your real life, which option actually leaves you ahead – in dollars and in flexibility?”

This guide unpacks that process so you can pressure‑test any recommendation you get this week.

1. First principles: what a refinance should really achieve

1.1 The real goal (and it’s not a flashy cashback)

A refinance is worthwhile only if it helps you:

1. Lower total cost (interest + fees) over a sensible timeframe; and/or
2. Improve your structure and safety (buffers, flexibility, tax setup); and/or
3. Move you closer to a clear goal (debt‑free date, investment, renovation, business growth).

Everything else – cashbacks, honeymoon rates, glossy marketing – is noise.

If you haven’t already, it’s worth reading how we frame this in Why A Good Broker Compares Total Loan Cost, Not Just Rate.

1.2 Why “just chasing the lowest rate” often backfires

The lowest rate can still be an expensive loan if:

• The revert rate (after the fixed or discount period) is high.
• The annual or package fees eat away the savings.
• You pay big application, valuation or discharge fees on the way in and out.
• You lose features you actually use (offset, extra repayments, multiple splits).
• You’re forced into a structure that hurts tax outcomes or future borrowing.

This is why a good broker runs scenarios, not just looks at comparison rates.

2. How brokers actually compare refinancing offers

2.1 The broker’s comparison worksheet: lining up apples with apples

Good brokers use some version of a comparison grid. The basic questions are:

• Same loan amount? E.g. $750,000 each option.
• Same term? E.g. 25 years remaining.
• Same repayment type? P&I vs interest‑only (IO).
• Same fixed/variable assumptions? E.g. 2‑year fix then revert.

Once those are aligned, we line up:

• Interest rate now and revert rate later.
• All fees (application, valuation, legal, annual, discharge).
• Cashback or incentives.
• Features that matter for you (offsets, splits, redraw, extra repayments, online tools).
• Policy and servicing – does the lender actually like your profile?
• Strategic fit – how this structure plays with your tax, future plans and risk tolerance.

See also how we do this for business and asset finance in True Cost of Equipment Finance: Turning Headline Rates into Real Numbers.

2.2 Worked example: two refinance offers, one winner

Scenario: Owner‑occupier, $750,000 loan, 25 years remaining.

• Current loan: 6.80% variable, P&I, $0 annual fee.
• Offer A: 5.99% variable, $395 annual package fee, $3,000 cashback.
• Offer B: 6.09% variable, $0 annual fee, $1,500 cashback.

Step 1 – Monthly repayments (rounded):

• Current: about $5,235 p/m.
• Offer A: about $4,824 p/m.
• Offer B: about $4,878 p/m.

Step 2 – 2‑year cost comparison

In this simplified snapshot (ignoring tax and offset effects):

• Offer A beats staying put by about $8,060 over 2 years.
• Offer B beats staying put by about $6,350.
• Offer A beats B by around $1,700.

A broker will then stress‑test: what if rates rise another 1–2%? What if you clear an extra $10,000 into offset? What if you sell or upgrade in year three?

3. Cashbacks: tempting, useful, but never the main course

Cashbacks can be helpful, but only when the underlying loan still stacks up.

3.1 How cashbacks are funded

Lenders aren’t charities. A cashback is a marketing expense, paid for by:

• Slightly higher ongoing rates than the sharpest competitors; and/or
• Higher annual or package fees; and/or
• Tougher rules about how long you’re expected to stay.

As we explain in How Commission, Clawback And Broker Fees Really Work In Australia, lenders also use clawbacks on broker commissions to discourage quick churn. That’s one reason good brokers won’t recommend flipping lenders every year just for a new cashback.

3.2 When a cashback can be genuinely helpful

Cashbacks are most useful when you:

• Need to rebuild buffers (e.g. fund a few months’ expenses in offset).
• Have one‑off refinance costs (e.g. discharge, minor renovations, legal fees).
• Are consolidating high‑rate debts and need cash to close the old facilities properly.

In these cases, a $2,000–$4,000 cashback can materially reduce risk – if the ongoing loan is still competitive.

3.3 Common cashback traps

Watch for:

• High revert rates after a short honeymoon.
• Steep annual package fees that eat away the benefit within a couple of years.
• Cashback being used to ‘hide’ expensive LMI or heavy fees.
• A broker who talks only about the cashback, not your 3–5‑year plan.

If you want to test broker incentives and conflicts, the questions in Do Mortgage Brokers Favour Higher Commissions? How Pay Really Works are worth using.

4. Beyond headline rates: features and structure that really matter

4.1 Key features brokers weigh up (and what you should ask)

Not all features are equal. Brokers focus on features that support your goals.

4.2 Structure first, rate second

A sub‑optimal structure at a slightly cheaper rate can cost more over time than the right structure at a slightly higher rate.

Examples:

• Mixing home and investment debt in a single split, making tax deductions messy and harder to maximise later.
• Refinancing to a lender that won’t support your plan to upgrade in 2–3 years.
• Locking 100% of the loan into a long fixed term when you’re likely to sell or restructure.

This is why we emphasise, in our uncrossing and tax‑focused guides, that loan purpose, not security, drives deductibility – and why separate splits are so important.

4.3 Worked example: rate vs structure

Two options for a couple with $600,000 home loan and plans to buy an investment within 3 years.

• Option 1 (Cheaper rate, poor structure): One $600,000 split at 5.89%, no offset, P&I.
• Option 2 (Slightly higher rate, good structure):
  • Split 1: $400,000 home loan at 5.99% with offset.
  • Split 2: $200,000 separate split for future investment deposit, IO for 3 years.

Option 2 may cost a few dollars more per month initially, but it:

• Allows clear separation of investment‑related debt.
• Keeps cash in offset to reduce non‑deductible interest.
• Avoids messy re‑borrowing later that can compromise tax deductibility.

For most property investors, that structural clarity is worth far more than 0.10% on rate.

5. Cost, timing and break‑even analysis (this is where brokers live)

A simple break-even calculation helps decide if refinance costs are worth the savings.

5.1 Every refinance has friction costs

A good comparison always includes:

• Discharge fee from current lender (often $200–$400).
• New lender application, settlement, valuation and legal fees (which may be partially rebated).
• Government registration fees for mortgage and discharge.
• Any break costs for exiting a fixed rate early.

We go into a step‑by‑step framework for this in Refinancing After Rate Rises: How To Know If Switching Pays.

5.2 Break fees and fixed‑rate exits

If you’re on a fixed rate, the lender may charge an economic break cost to exit early.

These can range from a few hundred dollars to tens of thousands, depending on:

• Time remaining on the fixed term.
• The gap between your fixed rate and current wholesale rates.
• The remaining loan balance.

Brokers will usually obtain an indicative break cost from your current lender before even considering a refinance.

5.3 Quick break‑even calculation you can do this week

1. Estimate total cost to move (fees + break costs – cashback).
2. Estimate monthly interest saving on the new loan vs your current loan.
3. Divide total cost to move by monthly saving.

Example:

• Cost to move (all in): $2,600.
• Monthly repayment saving: $210.
• Break‑even: $2,600 / $210 ≈ 12.4 months.

If you’re likely to keep the loan for at least 3–5 years and policy/structure fit is good, that’s usually a solid result.

If you might sell, upgrade or restructure in 12–18 months, that’s a much closer call.

5.4 The impact of rising rates and mortgage stress

With the cash rate around 4.35% in 2026 and Roy Morgan estimating 32.5% of owner‑occupier borrowers as ‘At Risk’, refinancing decisions now have less margin for error.

Brokers therefore:

• Stress‑test your repayments at 2–3% above today’s rate.
• Factor in APRA’s 3% serviceability buffer when assessing your future moves.
• Aim to build 3–6 months of stressed holding costs in buffers after refinance, or 6–12 months for highly geared or self‑employed clients.