Refinancing- Is it Right for you?

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Refinancing can offer benefits such as a lower interest rate, reduced repayments, or access to features that better suit your current needs. However, it’s not always the right move for everyone. Costs such as application fees, valuation fees and potential break costs can outweigh the benefits if the timing or structure isn’t right. That’s why it’s important to look at refinancing in the context of your full financial picture, not just the interest rate alone. 

A fixed rate home loan offers certainty, as your repayments stay the same for the fixed period regardless of interest rate movements. This can make budgeting easier and provide peace of mind during periods of rising rates. The trade-off is reduced flexibility — fixed loans often limit extra repayments, restrict access to redraw or offset accounts, and can attract break costs if you refinance or sell during the fixed term. 

A variable rate home loan moves with the market, meaning your repayments can increase or decrease over time. This flexibility often allows for extra repayments, redraw facilities and offset accounts, which can help reduce interest over the life of the loan. The downside is uncertainty, as repayments can rise if interest rates increase, which may place pressure on household cash flow if not planned for.

Refinancing isn’t always about chasing a lower rate — sometimes it’s about accessing features that better support how you manage your money. Options such as offset accounts, redraw facilities, split loans or more flexible repayment options can make a meaningful difference over time. Choosing features that align with your spending habits and financial goals can help you stay in control and reduce interest in the long run. 

When refinancing, it’s common for the loan term to be reset back to 25 or 30 years, which can reduce repayments but increase the total interest paid over time. While lower repayments may feel appealing in the short term, extending the loan term can significantly delay how long it takes to own your home outright. Keeping your remaining loan term the same, where possible, helps ensure refinancing genuinely improves your position rather than simply stretching it out 

Even a small reduction in interest rate can have a meaningful impact over time. For example, on a $500,000 loan, a 0.50% lower rate could reduce repayments by around $150 per month and save tens of thousands of dollars in interest over the life of the loan. While exact savings depend on your loan balance and term, this example shows why reviewing your rate can be worthwhile 

Making weekly or fortnightly repayments instead of monthly can help reduce interest and pay your loan off sooner, as repayments are applied more frequently. For example, switching from monthly to fortnightly repayments on a $600,000 loan could result in making the equivalent of one extra monthly repayment each year, reducing interest and shortening the loan term. Over time, this small change can lead to meaningful savings 

Refinancing may also allow you to access equity built up in your property, depending on its value and your remaining loan balance. This equity can sometimes be used for purposes such as renovations, debt consolidation or purchasing another property. Accessing equity increases your loan balance, so it’s important to understand how it fits into your broader financial goals and long-term plans before proceeding. 

Refinancing decisions can have long-term impacts that aren’t always obvious at first glance, especially when factors like loan structure, fees, flexibility and future plans are involved. Speaking with a mortgage broker can help you understand whether refinancing genuinely improves your position, compare options across different lenders, and avoid unintended outcomes such as higher overall interest or reduced flexibility. Having the right guidance can provide clarity and confidence, so any changes you make are aligned with your needs now and into the future. .