Refinancing – what does it involve?

Life changes constantly and a lot can happen in 30 years. That’s why it’s important to consider refinancing by reviewing your home loan regularly to make sure it still works for your lifestyle and needs over the years.

You might find it beneficial to refinance your home loan at various stages. But what is mortgage refinancing and how can it benefit you?

What is refinancing?

Refinancing involves paying out your current home loan by taking out a new loan either through a different lender or with your existing lender (by revising your current terms).

You should refinance only if it will put you in a better financial situation and give you a more suitable home loan for your needs.

  • A new lender would give you a new loan and you’d need to get a property valuation.
  • Your existing lender would do a loan transfer. You could swap to a different type of home loan, change your repayments, or split or combine your various loans.
Benefits of refinancing

Some benefits of mortgage refinancing include:

  • reducing your repayments to give you room to breathe in difficult times
  • paying off your loan faster by making extra repayments on a lower interest rate
  • accessing equity to give you cash for a renovation or investment property
  • combining debts on credit cards and other loans to reduce the interest you pay
  • accessing useful features like an offset account or redraw facility.
When you can’t refinance

Not everyone can refinance their home loan. For example, if your valuation has decreased, you may not have enough security against the new loan. Or if your circumstances have changed, you may no longer meet the lender’s loan criteria.

In this case, you may need to consider your options, such as keeping your current loan or asking what else lenders can do for you instead.

Where to begin?

You don’t have to figure it all out on your own. You can find a range of websites, such as realestate.com.au that can provide estimated savings for you, but we recommend talking to an expert. Our financial professionals can provide a free strategy consultation to help you work out what’s important to you, where you’d like to be, and whether refinancing will get you there. Read more about our finance services here.