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Refinancing My Loan

Don’t settle. Make the smart switch from one home loan to another.

home loan refinancing Australia

Refinancing your home loan means taking out a new mortgage to repay your existing loan. Perhaps you’ve experienced a change in personal and financial circumstances or maybe you’re simply after a better deal. Either way, changing to an improved loan structure can provide the financial benefits and flexibility that your current loan lacks.

Refinancing doesn’t always mean switching lenders, as you can refinance internally with your current lender. But take it from the pros: lenders rarely reward you for loyalty, so you’ll likely end up with a lower interest rate if you choose a new one. In fact, brand new customers often nab better rates than those who have stuck with their lender through thick and thin! That’s why we recommend checking the market for refinancing opportunities every two to three years.

So, don’t get locked into a home loan that’s draining your finances when you could be saving time and money.

Our Refinancing Guide

Depending on your requirements, values and goals, refinancing may or may not be the right decision for you.

What do you value in a home loan?

  • Lower interest rates?
  • Reduced fees?
  • Improved client service?
  • Extra features?
  • More flexibility?
  • Access to equity?
  • Increased borrowing capacity?
  • Easy access to online banking?

If you’ve nodded yes to any of the above questions, read on to discover the advantages and disadvantages of refinancing your home loan.

While the advantages of refinancing differ depending on individual circumstances, you could:

  • Bag a lower interest rate. The home loan market is saturated with lenders fighting for your business. And competitive rates mean lower repayments! Shop around before settling on a promotion or lender because there are heaps of ever-changing options. Luckily, our team receives regular updates from lenders, keeping up to speed on the latest offers so that you can get the lowest rate possible.
  • Gain some extra features. You can save on interest repayments by unlocking more features, such as offset accounts and redraw facilities, additional repayments and loan portability. These added benefits give you the flexibility to make the most out of your mortgage, paying it off quicker and easier.
  • Access home equity. This refers to the difference between your property’s market value and the outstanding balance on your mortgage. By refinancing to unlock your equity, you can use the money to invest and grow your personal wealth.
  • Consolidate your repayments. Juggling several debts from numerous lenders isn’t easy. Combining your existing debts into a single manageable loan is. You can save money on fees and reduce your payable interest by rolling your debts into just one repayment. However, increasing your home loan means paying it off for longer and possibly facing greater interest.
  • Capitalise on special offers. Many home loans include year-round cash incentives or sign-up bonuses to persuade borrowers to switch. These offers are a fantastic way to slash the expense of switching loans. That said, make sure your new loan has competitive rates, fees and features so that you’re not left in the dust once the cash has been spent.

In most cases, refinancing is a pretty great idea. However, sometimes switching loans isn’t worth the time, effort or costs.

In the following situations, it’s probably in your best interests to stick with your existing mortgage structure:

  • You have a fixed rate home loan with a high exit cost. The switching fees may eclipse any refinancing benefits, at least until the fixed rate period ends.
  • There’s a possibility you’ll sell your property in the near future, so the new loan won’t be held long enough for any significant savings.
  • Your loan value is quite small, meaning any savings from switching won’t necessarily cancel out the interest you’ll pay.
  • You’ve been with a particular lender for a while, are pleased with the service and hold other loans with them. In other words, ‘’if it ain’t broke, don’t fix it.’’
  • Your loan-to-value ratio remains over 80% or your property’s value has fallen. If you refinance and are still borrowing more than 80% of your property’s purchase price, you’ll end up paying LMI all over again.
  • You want to refinance to a longer term, which could increase the payable interest over the term of your loan.

Generally, refinancing itself doesn’t cost a cent. However, once you take all of its associated fees into account, things start to add up. It’s important to weigh up your potential savings against these expenses.

Switching your mortgage structure may come with several upfront costs, including:

  • Early exit fees for fixed rate loans: These may apply if you pay out your existing loan in full within the fixed rate term, and could potentially cost you thousands.
  • Discharge fees: Lenders usually charge $150 to $400 to release you from your existing mortgage.
  • Application fees: To start a new loan, you may have to pay for its set up and document preparation, depending on the lender.
  • Ongoing costs: These charges include monthly or annual fees. In addition, you could be charged to use a redraw facility when withdrawing any additional repayments you’ve already put towards your loan.
  • Lenders Mortgage Insurance (LMI): This one-off fee protects the lender from defaults on mortgage repayments when the property’s market value doesn’t cover the loan amount. It only applies if you owe over 80% of the purchase price on your loan refinance.
  • Valuation fees: Some lenders may request to have your property professionally valued at an additional cost.
  • Government fees: If you increase your loan when refinancing, your state government may impose certain charges for property registration and transfers.

Although you should always be aware of these expenses, don’t let short-term fees discourage you from making significant long-term savings.

Rest assured, we will help you to determine whether refinancing is the right choice for you, and if so, what costs you will face.