Get the full payout position
Ask the current lender for a dated payout figure, discharge charges and any early repayment adjustment.
The decision
The saving only matters after the switching cost.
Plain-English answer
Add every confirmed one-off cost, then divide the total by the expected monthly saving. That gives you the approximate break-even period.
Most borrowers can see the incoming lender’s rate. The less visible costs sit around the facility: valuation, two sets of legal work, security registration, discharge and, in some cases, a fixed-rate break amount.
The useful question is whether the new structure improves the position enough, for long enough, to recover the cost and justify the move.
Commercial refinance cost map
Every cost belongs to a person and a point in the process.
| Cost item | Who confirms it | When to confirm it | What changes the amount |
|---|---|---|---|
| Outgoing lender payout and discharge | Your current lender | Before settlement is booked | The payout figure, accrued interest, discharge fee and any contract-specific exit charge. |
| Fixed-rate break cost | Your current lender | Before you compare options | May apply when fixed-rate debt is repaid or materially changed before the fixed term ends. |
| Establishment and application fees | The incoming lender | At application or settlement | The lender’s charge for assessing, documenting and establishing the replacement facility. |
| Commercial valuation | Lender-appointed valuer | During assessment | Depends on the asset, valuation scope, location, complexity and number of properties. |
| Borrower and lender legal costs | Solicitors | During documentation and settlement | May include new facility documents, security releases, guarantees and title work. |
| Government and lodgement charges | The relevant registry and settlement platform | At discharge and registration | Varies by jurisdiction, dealing type and the number of titles or securities involved. |
| Advisory, accounting and specialist work | Your professional advisers | As scoped | May be required for entity changes, tax treatment, financial modelling or a more complex restructure. |
| Ongoing facility costs | The incoming lender | Over the life of the loan | Line fees, annual reviews, unused limits and other recurring charges belong in the comparison. |
There is no standard all-in figure. Actual costs depend on the facility contract, lender, loan size and type, security, jurisdiction, number of titles and complexity of the restructure. Written quotes and the current payout figure should replace estimates before a decision is made.
01
The first unknown to resolve before committing to a refinance timeline.
Fixed-rate debt
Ask for the break cost before you price the move.
A fixed-rate commercial facility may carry a break cost or early repayment adjustment when it is repaid or changed before maturity. Commercial contracts and calculation methods differ.
The facility contract and a current written payout figure control. A generic online formula is not evidence of the amount payable on your loan.
Request a dated payout or early repayment adjustment from the current lender before comparing options.
Break-even calculation
Use confirmed inputs, then do the simple maths.
01 · Switching costAdd the written one-off costs.
Include the payout, break amount, lender, valuation, legal, registration and advisory costs that apply.
02 · Monthly benefitCalculate the like-for-like saving.
Compare the same balance and period. Separate a true cost saving from a lower repayment caused by extending the term.
03 · Recovery periodDivide cost by monthly saving.
For example, $30,000 of confirmed switching costs divided by a $1,250 monthly saving produces a 24-month break-even period.
The example demonstrates the calculation only. It is not a cost estimate, rate quote or recommendation. Tax treatment, facility differences and the time value of money can change the decision.
Before lender engagement
Reduce avoidable cost before it enters the file.
Where appropriate, we approach a focused panel of suitable lenders and invite them to compete on structure, pricing and fees. We then negotiate the overall commercial package—not simply the headline rate—to help reduce avoidable costs.
Request the incoming fee schedule
Confirm establishment, valuation, legal, annual and event-based charges in writing.
Prepare one complete information pack
Current financials, leases, entity details and the security schedule reduce rework and late changes.
Set the structure before valuation
Confirm borrowers, guarantors, security and the lender’s valuation instruction before third-party costs begin.
Tax treatment
Borrowing costs need their own advice.
Do not assume every refinance cost is immediately deductible.
The ATO identifies loan establishment fees and legal costs for preparing loan documents as examples of borrowing expenses where the money is used to produce assessable income. Depending on the amount and loan term, those expenses may need to be claimed over time. Other costs can be treated differently. Ask your accountant or tax adviser to classify each item for your circumstances.
Source: Australian Taxation Office guidance on business borrowing expenses.
Commercial refinance cost FAQ
Settle the details before you commit.
What does it cost to refinance a commercial loan in Australia?
There is no reliable single figure. The total can include the outgoing lender’s payout and discharge charges, any fixed-rate break cost, incoming lender fees, valuation, legal work, government registration charges and professional-adviser costs. Ask for written figures before committing to the new facility.
How do I calculate the break-even point on a commercial refinance?
Add the confirmed one-off switching costs, then divide that total by the expected monthly saving. Review the facility term, repayments, covenants, security and exit flexibility as well, because a lower rate is not the only source of value or risk.
Is the lowest interest rate always the cheapest refinance?
No. Establishment and ongoing fees, the repayment profile, security requirements, fixed-rate break costs and how long you expect to keep the facility all affect the total funding cost.
Can a fixed-rate commercial loan have a break cost?
Yes. A break cost or early repayment adjustment may apply when fixed-rate debt is repaid or changed before the fixed term ends. The facility contract and the lender’s current written payout figure are the sources that matter for your loan.
Who usually pays the valuation and legal costs?
Commercial borrowers commonly pay for the incoming lender’s valuation and may also pay the lender’s legal costs, as well as their own solicitor. The scope and payment timing should be confirmed before any third-party work is commissioned.
What should I bring to an initial refinance cost review?
Bring the current facility letter, recent statements, fixed or variable rate details, maturity date, security schedule and the outcome you want from the new structure. That is usually enough to identify the main cost questions and the next information required.
Continue exploring
Read how BMF approaches the wider refinance decision, or return to the main website.