Why Should You Refinance?
After a few years, many home loans are no longer as competitive as they once were. Rates change, lending policies shift, and personal circumstances evolve. For that reason, it can make sense to review your loan periodically rather than leaving it untouched.
Refinancing simply means replacing your existing home loan with a new one, either with your current lender or a different lender. Whether it is the right move depends on why you are doing it and what you are trying to achieve.
Reviewing a home loan often reflects changing family and financial needs.
Common reasons people refinance
Most borrowers refinance for one or more of the following reasons.
To reduce interest costs or repayments
Lowering your interest rate can reduce your weekly repayments or help you pay down the loan faster. This is often the starting point for many borrowers, particularly if their loan has not been reviewed for several years.
To access equity
As property values increase and your loan balance reduces, you may be able to access equity for future investments, renovations or other strategic purposes. This needs to be done carefully, with a clear understanding of the risks and long-term impact.
To fund renovations
Rather than taking out a separate loan, some borrowers refinance to incorporate renovation costs into their home loan, often at a lower interest rate than unsecured finance.
To consolidate debts
Refinancing can sometimes be used to consolidate higher-interest debts into a single loan. While this can simplify cash flow, it is important to understand how it affects the total interest paid over time.
When refinancing may not be the right move
Refinancing is not always the best option.
Switching loans can involve costs such as discharge fees, application fees, valuation costs and potential Lenders Mortgage Insurance. In some cases, these costs can outweigh the short term savings of a lower interest rate.
It is also worth considering how long you plan to stay in the property and whether changes to loan features or flexibility matter more than headline pricing.
Making an informed decision
The value of refinancing comes from understanding both the benefits and the trade-offs. A lower rate on paper does not always lead to a better outcome once fees, loan structure and long-term plans are taken into account.
Running the numbers properly and comparing different scenarios is usually far more useful than simply chasing the lowest advertised rate.
If you would like to review your current loan and understand whether refinancing makes sense for your situation, I am happy to talk it through and work through the detail with you.