When is it worth refinancing from one bank loan to another, given clawbacks and fees?
Refinancing between bank loans is generally worth it if you can recover all switching costs—including clawbacks, legal fees, and valuation fees—within 12 to 18 months of interest savings. The biggest cost to avoid is the early repayment penalty of 1.5% of the outstanding loan, which applies if you're still within the lock-in period.
Last updated: 22 Apr 2026
When refinancing between bank loans, there are several costs to account for:
- Clawback: $1,500-$2,000 if within the clawback period of your existing loan
- Legal fees: $2,000-$2,500, typically subsidised or fully covered by the new bank
- Valuation fee: $300-$500 (sometimes waived)
- Early repayment penalty: 1.5% of outstanding loan if within the lock-in period - this is the biggest cost and should generally be avoided
The general rule is: if you can recover all switching costs within 12-18 months of interest savings, refinancing is worth it.
Here's a worked example on a $600,000 loan:
- Rate drop of 0.5% saves approximately $250/month
- Total switching costs (clawback + legal, net of new bank subsidy): approximately $2,000
- Payback period: approximately 8 months
Cashew can help advise when it is worth it to refinance from one bank to another.