When you refinance your home loan, you pay an application fee to the new lender to assess and process your loan. Most lenders charge between $200 and $600, though some waive it entirely.
Refinancing application fees are separate from ongoing account fees, valuation costs, or discharge fees from your current lender. Understanding what you pay upfront, and whether those fees deliver value, helps you decide whether a refinance makes financial sense.
What a Refinancing Application Fee Actually Covers
The application fee covers the lender's cost of assessing your serviceability, ordering a property valuation, running credit checks, and preparing loan documents. Some lenders bundle the valuation into the application fee. Others charge separately, so the total upfront cost can vary by several hundred dollars depending on the lender's pricing structure.
Consider a borrower in Mandurah with a $450,000 loan who applies to refinance to a lender offering a rate 0.60% lower than their current variable rate. The new lender charges a $395 application fee and a $220 valuation fee, so total upfront costs are $615. The rate reduction saves roughly $225 per month in interest, meaning the upfront fees are recovered in under three months. After that, the saving continues for as long as the borrower holds the loan.
Some lenders advertise no application fee but offset the cost with higher ongoing fees or a slightly higher rate. Always compare the total cost over the period you expect to hold the loan, not just the headline application fee.
When Application Fees Are Waived or Negotiable
Lenders occasionally waive application fees during promotional periods or for borrowers with strong serviceability and equity. This is more common when refinancing a loan above $500,000, or when switching from a competitor the lender is actively targeting.
If your fixed rate period is ending and you are considering refinancing rather than rolling onto your current lender's variable rate, ask whether the new lender will waive or reduce the application fee. Many lenders are willing to negotiate to secure the business, particularly if you are also consolidating debt or increasing your loan amount to access equity.
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How Application Fees Fit Into the Total Cost of Refinancing
Application fees are one component of the total switching cost. You also pay a discharge fee to your current lender, typically $150 to $400, and potentially settlement fees, legal costs, or mortgage registration charges depending on your state and lender.
In a scenario where a borrower refinances a $380,000 loan to reduce their rate and access an offset account, the total cost might include a $250 application fee, a $350 discharge fee, and $200 in legal and settlement costs. That is $800 in total. If the refinance saves $180 per month through a lower rate and improved cash flow via the offset account, the break-even point is around four to five months.
If you plan to sell the property within six months, those fees may not be recovered. If you intend to hold the property for several years, the upfront cost becomes negligible relative to the ongoing benefit. A loan health check can help clarify whether the numbers support a switch.
Paying Application Fees Upfront or Capitalising Them Into the Loan
Most lenders require the application fee to be paid upfront, either by direct debit or credit card when you submit your application. Some lenders allow you to add the fee to the loan amount, which means you pay interest on it over the life of the loan.
If you capitalise a $400 application fee into a 30-year loan at current variable rates, you pay interest on that $400 for the full term unless you make extra repayments. The total cost of that $400 increases over time. Paying upfront avoids this, but only if you have the cash available without affecting your savings buffer.
Application Fees When Refinancing to Access Equity
When you refinance to access equity for an investment property deposit or renovation, the application fee is calculated on the new loan amount, not the increase. A borrower increasing their loan from $320,000 to $420,000 to release equity pays the same application fee as someone refinancing $420,000 without increasing the balance.
Lenders assess serviceability on the new loan amount, so if you are refinancing to access equity, the application process is identical to a standard refinance. The fee reflects the lender's cost of assessment, not the size of the equity release.
What Happens If Your Refinance Application Is Declined
If your refinance application is declined, most lenders do not refund the application fee. The fee covers the cost of assessment, valuation, and credit checks, which the lender incurs regardless of the outcome.
To reduce the risk of paying an application fee for a declined loan, discuss your serviceability and financial position with a broker before applying. In our experience, most declined refinance applications involve borrowers who have changed employment recently, taken on additional debt since their last loan, or miscalculated their living expenses. A pre-assessment identifies these issues before you commit to an application fee.
How to Compare Refinance Offers Accounting for Application Fees
When comparing offers, calculate the total cost over the first 12 months, including the application fee, ongoing account fees, and interest charges. Two lenders might offer the same rate, but one charges a $600 application fee and no monthly account fee, while the other charges no application fee but a $15 monthly fee.
Over 12 months, the first lender costs $600 upfront. The second costs $180 in ongoing fees. If you hold the loan for more than three years, the second lender becomes more expensive. If you refinance again within 18 months, the first lender costs more.
A broker can model these scenarios based on how long you expect to hold the loan and whether you plan to make extra repayments or access features like redraw or offset accounts.
Call one of our team or book an appointment at a time that works for you to discuss whether refinancing delivers enough value to justify the application fee and other switching costs.
Frequently Asked Questions
How much is a typical refinancing application fee?
Most lenders charge between $200 and $600 to assess and process a refinance application. Some lenders waive the fee during promotional periods or for borrowers with strong equity and serviceability.
Can I add the application fee to my loan instead of paying upfront?
Some lenders allow you to capitalise the application fee into the loan balance, but you will pay interest on that amount over the life of the loan. Paying upfront avoids the additional interest cost if you have the cash available.
Do I get my application fee back if my refinance is declined?
No, most lenders do not refund the application fee if your loan is declined. The fee covers the cost of assessment, valuation, and credit checks, which the lender incurs regardless of the outcome.
What other fees do I pay when refinancing apart from the application fee?
You also pay a discharge fee to your current lender, typically $150 to $400, and potentially settlement fees, legal costs, or mortgage registration charges. The total cost varies depending on your lender and state.
When does it make sense to pay an application fee to refinance?
It makes sense when the monthly saving from a lower rate or improved loan features outweighs the upfront cost within a reasonable period. If you plan to hold the loan for several years, the application fee becomes negligible relative to the ongoing benefit.
