Should I refinance my home loan?
Refinancing — moving your bond to a new bank for a lower rate — can cut your monthly instalment and your total interest, but it is not free. bond.co.za explains how the break-even calculation decides the question honestly, what switching really costs in South Africa, and when your own bank is the better first call.
By bond.co.za Editorial Team, Home loan content editor · Reviewed by Registered Mortgage Originator · Published 2026-09-13 · Last verified 2026-09-13
- Refinancing makes sense when the monthly saving from a lower rate covers the switching costs before you sell or settle — the break-even point, not the rate cut, is the decision.
- On an illustrative R 1 500 000 bond priced from prime + 1.0% to prime − 0.5%, the saving is about R 1 521 a month against roughly R 45 306 in registration costs.
- Ask your own bank to re-price your bond first — a matched rate avoids the registration costs entirely.
- Small balances, short remaining terms and tiny rate cuts rarely break even — run the numbers for your actual bond before you sign anything.
Last updated: 13 Sept 2026 · Prime is 10.5%. Source: South African Reserve Bank (SARB) (2026-09-12). Figures are for information only.
When does refinancing make sense?
A lower rate is only half the answer — the other half is time: enough remaining term for the saving to repay the costs.
Refinancing replaces your current home loan with a new one at a different bank, priced off today’s rates instead of the rate you were granted years ago. If your credit record has improved, your affordability has strengthened or the market has simply moved, the rate a competitive bank will offer you now can be meaningfully below what you are paying. Every month you stay on the old rate after that point is a month you are overpaying.
Switching tends to make sense when
- Your rate is meaningfully above what a competitive bank would charge today — a gap of half a percentage point or more is worth investigating on a large balance.
- You still have many years left on the bond, so a lower instalment has time to outweigh the once-off costs.
- You are planning to keep the property well past the break-even point — the longer you stay, the more of the saving you actually bank.
- Your credit profile, income or the equity in your home has improved since you took out the original bond, so you may now qualify for sharper pricing.
It usually makes less sense when
- Your balance is small — on a few hundred thousand rand, even a full percentage point may save less per month than the costs swallow upfront.
- You have only a few years left: most of each instalment is already capital, so there is little interest left to save.
- The rate cut on offer is tiny — a quarter of a point on an average balance can take years longer than the remaining term to pay back its own costs.
- The switching costs are high relative to the saving — always compare the actual rand amounts, not the percentage points.
- You plan to sell or settle soon: if you will be gone before the break-even month, the switch loses money on the maths alone.
Notice what is missing from both lists: the size of the rate cut alone. A 1% cut on a bond you will settle in two years can be worthless, while a 0.5% cut on a bond with eighteen years left can be worth hundreds of thousands of rand. The decision lives in the interaction between the saving, the costs and the time — which is exactly what the break-even calculation below measures.
The real costs of switching your bond in South Africa
An illustrative R 1 500 000 bond. Your actual costs depend on your balance and the fees your attorney and bank charge — always get written quotes.
| Cost | Amount | Note |
|---|---|---|
| Bond attorney (conveyancing) fee, incl. VAT | R 37 530 | Scale-based on the new bond amount. |
| Deeds Office bond registration fee | R 1 738 | Fixed fee set by the Deeds Office fee schedule. |
| Bank initiation fee, incl. VAT | R 6 038 | NCA-capped once-off fee. Some banks charge less or capitalise it into the loan. |
| New bond registration total | R 45 306 | Excludes early-settlement or cancellation costs on your existing bond. |
Three cost lines make up the new bond registration. The bond attorney’s conveyancing fee is charged on a national scale based on the new bond amount and is quoted exclusive of VAT. The Deeds Office fee is a fixed government charge for registering the new bond. The bank initiation fee is a once-off charge capped under the National Credit Act — some banks charge less, and some capitalise it into the loan rather than charging it in cash.
There is no transfer duty on a refinance, because ownership of the property does not change — transfer duty only applies when a property is sold. But the new bond is only half the ledger: your current bank may charge early-settlement or cancellation costs on the old bond (on a variable-rate bond these are capped under the National Credit Act), and the cancellation attorney charges a separate fee to register the cancellation at the Deeds Office. Both belong in your break-even sum, and neither appears in most banks’ marketing.
Sources: Law Society of South Africa (LSSA) recommended conveyancing fee guideline (effective 2026-07-01), South African Deeds Office Schedule of Fees of Office (effective 2026-04-01), and National Credit Act, No. 34 of 2005, Reg 42(2) Table B, as substituted by GN 1080 / Government Gazette 39379. Last verified 2026-08-15.
There is also a cost that never appears on a quote: your time. A bond switch is a full credit application — valuation, affordability assessment, attorney appointments and Deeds Office registration — so budget several weeks to a few months, the same as a new bond.
How the break-even calculation works
One division answers the whole question — and it uses your actual numbers, not a rule of thumb.
The break-even point is the moment the switch stops costing you money and starts saving it. Work it out in three steps. First, compute the monthly saving: the difference between your current annuity instalment and the instalment at the new rate, on the same balance over the same remaining term — switching re-prices the loan, it does not re-term it. Second, add up the once-off switching costs. Third, divide: break-even months = switching costs ÷ monthly saving, rounded up. If you will still hold the bond at that month, the saving after it is money in your pocket; if you will not, the switch loses money on the maths alone.
Because the balance and term are identical in both scenarios, the total interest saved over the remaining term is exactly the monthly saving times the number of months left — no amortisation schedule needed. Subtract the switching costs and you have the net saving: the single rand figure that should drive the decision. When the new rate does not actually lower the instalment, there is no break-even at all — the honest answer is that switching at those rates simply costs you money.
Worked example: an illustrative R 1 500 000 bond
A bond of R 1 500 000 with 20 years remaining, priced from an illustrative 11.50% (prime + 1.0) down to an illustrative 10.00% (prime − 0.5), with switching costs of R 45 306 composed from the fee scales above. Prime is 10.5% (South African Reserve Bank (SARB), verified 2026-09-12).
- Monthly instalment: R 15 996 → R 14 475
- Monthly saving: R 1 521
- Break-even point: 30 months (2 years 6 months)
- Total interest saved over the remaining term: R 365 069
- Net saving after switching costs: R 319 763
Illustrative only — the rate margins show how the maths works, not a rate you have been offered. Your own saving and break-even depend on your balance, remaining term, actual rates and actual quoted costs.
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Should you refinance? Run your own break-even
Enter your outstanding balance, remaining term, current rate, the rate you could get and your quoted switching costs — the estimate shows your monthly saving, break-even point and net saving. Estimates with stated assumptions, not a quote.
Last updated: 2026-09-12. Prime is 10.5%. The default switching-cost estimate is composed from bond registration fees (conveyancing + Deeds Office + initiation) at R 1 500 000 — roughly R 45 306 at your balance — so adjust it to your attorney’s and bank’s written quotes. Source: South African Reserve Bank (SARB) (2026-09-12). Figures are illustrative estimates, not a quote or a guarantee of savings.
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Your monthly saving, break-even point and net saving — including what your current bond may be overcharging you — computed from the numbers you entered above, assumptions stated, emailed to you.
Assumptions and methodology:
- The remaining term is kept unchanged after the switch: the new bond amortises the same outstanding balance over the same number of months. Switching re-prices the loan; it does not re-term it.
- Nominal annual interest rate compounded monthly (monthly rests), reducing balance — the standard South African home-loan convention.
- Monthly rate factor i = annual rate % ÷ 100 ÷ 12 (e.g. 10.50% → 0.00875 per month).
- Fixed annuity instalment: payment = P × i ÷ (1 − (1 + i)^−n), where P is the outstanding balance and n the remaining months.
- Total interest saved = monthly saving × remaining months. This is exact under the unchanged-term assumption: total interest over the term equals total repaid minus the balance, and the balance is identical in both scenarios.
- Break-even months = switching costs ÷ monthly saving, rounded up — the first month in which the cumulative monthly saving has covered the once-off costs.
- Switching costs are treated as paid upfront in cash. If your bank capitalises them into the new loan instead, you also pay interest on that capitalised amount, which pushes the real break-even out further than this estimate shows.
- Both the current and the new rate are assumed constant over the remaining term. Any future change in prime moves both instalments and the saving.
- Keep full floating-point precision internally; round to the nearest rand only at display.
- All outputs are illustrative estimates, not a quote, an offer of finance, or guaranteed savings. Your actual rate depends on the bank’s assessment of your credit profile, affordability and the loan-to-value on your property.
What to do before you switch banks
The cheapest switch is often the one you never make — because your own bank matched the rate.
Start with your own bank. Call the home-loans desk, tell them you are considering switching, and ask whether they will re-price your bond to match what the market is offering. Banks routinely do this to retain good accounts, and a re-priced bond at your existing bank comes with no registration costs, no attorneys and no credit application — the break-even is instant. Your position is far stronger with a competing written offer in hand, so get one before you call.
For the competing offer, use a bond originator rather than walking into a single branch. An originator submits one application to every major South African bank and brings you back side-by-side offers — on a refinance, that competition is the entire point, because the strongest offer sets the rate your own bank has to beat. The full process, timelines and paperwork are covered in our guide to bond switching in South Africa.
Before you commit, collect every number in writing: the new bank’s offered rate and initiation fee, the bond attorney’s conveyancing quote, the Deeds Office fee, your current bank’s settlement figure and early-settlement terms, and the cancellation attorney’s fee. Feed those into the calculator above. If the break-even lands well inside the time you plan to keep the property, switching is worth doing; if it does not, negotiate harder or stay — both are good outcomes, because now you know the maths.
Beware of any quote framed only as a percentage-point saving. Ask every provider of each quote one question: what is this in rand per month, and what does it cost in rand upfront? The break-even calculation is only as honest as the rand figures you feed it.
Straight answers about refinancing
Does refinancing hurt my credit score?
Applying to a new lender involves a credit check, which can have a small, temporary effect on your credit score, as with any new credit application. Settling your old bond in good standing and keeping the new one up to date is generally positive for your credit record over time. One practical tip: submit a single application through a bond originator rather than several direct applications, so your record is not marked by multiple bank checks in a short space.
Can I refinance with the same bank?
Yes — and you should ask before you switch. Many banks will re-price or 're-price match' an existing home loan to keep your business, which can deliver most of the saving with none of the registration costs. Your negotiating position is strongest when you have a competing offer in writing from another bank. If your own bank will not move, then a switch to a new lender is the fallback — not the opening move.
How much does it cost to switch banks on a home loan in South Africa?
On an illustrative R 1 500 000 bond, the new bond registration side — bond attorney fee, Deeds Office fee and bank initiation fee — comes to roughly R 45 306. There is no transfer duty, because ownership of the property is not changing. Your current bank may also charge early-settlement or cancellation costs on the old bond, and the cancellation attorney charges a separate fee — ask both banks and the attorneys for written quotes before you commit.
Is it worth refinancing for 0.5%?
It depends on the balance, the remaining term and the costs — which is exactly what the break-even calculation answers. Half a percentage point on a R1.5 million bond with 20 years left is worth roughly R750 a month, which can cover typical switching costs in a few years. The same 0.5% on a R400 000 bond with five years left saves so little per month that the costs may never be recovered. Run your own numbers rather than relying on any rule of thumb.
What is the break-even rule of thumb for refinancing?
Divide the once-off switching costs by the monthly instalment saving, and round up: that is the number of months it takes for the saving to repay the costs. If you will still own the home and hold the bond at that point, refinancing is likely worth it on the maths; if you will sell or settle before then, it probably is not. As a rough filter, switches on large balances with many years left tend to break even in two to four years; small balances or short terms rarely break even at all.
Should I fix my rate when I refinance?
A fixed rate buys certainty, not cheapness: fixed home-loan rates in South Africa are usually priced at a premium to the variable rate and only lock for a limited period, so you typically start paying more per month from day one in exchange for protection against hikes. On a refinance — where you are switching to save money — a fixed rate can quietly eat the very saving you switched for. Fixing suits buyers whose budget cannot absorb a rate increase; if that is not you, the variable rate usually wins the comparison.
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Informational disclaimer
These figures are illustrative, not a quote or an offer of finance. The illustrative rates are priced off the current prime lending rate of 10.50% as at 2026-09-12 (source: South African Reserve Bank (SARB)); the current bond is shown at current prime + 1.0pp (illustrative granted-rate basis) and the new bond at current prime − 0.5pp (illustrative offered-rate basis). Your actual rate depends on your credit profile, affordability, the loan-to-value on your property and the bank’s assessment, and may be above or below prime — it differs for every applicant. The default switching-cost estimate is composed from the Law Society of South Africa (LSSA) recommended conveyancing fee guideline (effective 2026-07-01), the South African Deeds Office Schedule of Fees of Office (effective 2026-04-01) and the National Credit Act, No. 34 of 2005, Reg 42(2) Table B, as substituted by GN 1080 / Government Gazette 39379; it excludes any early-settlement or cancellation costs your current bank may charge — ask both banks for written quotes. The calculation assumes both rates stay constant over the remaining term and that the remaining term is unchanged by the switch. This calculator shows what could happen under these assumptions. It does not guarantee any saving, rate, break-even timing or loan approval. Confirm the actual figures with your bank or a registered bond originator before you switch. The information on this page is for educational purposes only and is not financial advice. Always confirm the specific rates, costs and settlement figures with your bank, the new lender and the appointed attorneys before you act, and speak to a qualified financial adviser if you are unsure whether refinancing suits your circumstances.
Last updated: 13 Sept 2026. Assumptions: The remaining term is kept unchanged after the switch: the new bond amortises the same outstanding balance over the same number of months. Switching re-prices the loan; it does not re-term it. Nominal annual interest rate compounded monthly (monthly rests), reducing balance — the standard South African home-loan convention. All outputs are illustrative estimates, not a quote, an offer of finance, or guaranteed savings. Your actual rate depends on the bank’s assessment of your credit profile, affordability and the loan-to-value on your property.
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