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  • Writer's pictureColin Green

Should I Refinance My Home Loan?

Updated: Aug 21, 2023

With property prices declining, many people are asking whether now is a good time to refinance their home loans. Refinancing your mortgage is a great way to save money on your monthly payments and lower your principal balance, particularly if you are coming to the end of a fixed rate term. However, many people are put off exploring refinancing because they don’t fully understand what it means or they think it’s too complicated to find and negotiate a better deal. So we thought we’d help answer some of your most common questions about home loan refinance.


property owner discussing if they should refinance a home loan


What Is Refinancing?

Refinancing basically means changing your existing mortgage for a new one with a view to improving the terms of your loan. It involves taking out a new home loan to pay off your existing mortgage. While it might sound counterintuitive, there are some great benefits and opportunities that you can take advantage of if you choose to refinance your home loan. We have a saying at CJG Finance: Loyalty is for friends, family and footy teams, not banks. Mortgage holders are becoming increasingly aware of something called 'the loyalty tax'. Many lenders reserve their best interest rates to attract new customers and, well, they can tend to take their existing clients for granted.⁣ But research by PEXA shows that refinancers generally gain an average 0.4 percentage point reduction in their home loan interest rate, saving $1524 annually on a $610,000 loan. Another factor to think about: falling property prices could see your equity dip and this can affect refinancing. This is because most lenders require 20% equity in order to refinance. However, as property prices fall, so too can the equity in your home. This means if you leave it too late, you might be stuck in something called 'mortgage prison' with your current lender. Additionally, if you’re planning on cashing out equity for money to renovate, invest or boost your super… the more your property price drops, the less equity you can unlock. So depending on how your property is fairing, refinancing now may be a smooth move.


Why refinance a home loan?

So what are the most common reasons for people to look at refinancing their home loan?


Lower your interest rate

Finding a lower interest rate can save you money and might also help you to pay off your loan sooner. It means that your monthly repayments might be lower, leaving you with more disposable income. You may also then be able to reduce your monthly payment by increasing the amount of principal to be paid each month, allowing you to pay off your loan sooner and save on interest charges.


More Flexible Loan Terms

If you have had your loan for a while and your needs and circumstances have changed, you might want to refinance to take advantage of newer loan options. This could include flexible repayments, reducing your loan repayment term, making use of an offset account to reduce your interest charges or perhaps you want to consider a redraw facility if you plan on making some extra payments.


Consolidate Your Debts

Refinancing may enable you to consolidate other debts into one easy payment per month (such as credit cards, car or personal loans) making it easier for you to manage all of your finances.


Consolidating your debt may be the best way to lower your monthly payments and save money on interest charges. If you want to consolidate multiple debts into one payment, what you're really doing is borrowing against the equity in your house by taking out a new loan that pays off all of those other debts at once. This will allow you to pay just one payment instead of making multiple payments every month—and usually at a much lower interest rate than what was being charged on those other accounts.


Access Equity In Your Home

If you have sufficient equity in the home, this option allows you to take out money from that equity and use it to achieve other finance goals, whether that be to renovate your home, travel, buy stocks and shares or even invest in a rental property.



So, is refinancing right for you? Refinancing is a great way to save money and pay off your home faster. It can also be helpful if you want to consolidate debt or lower your monthly payments. If you’re thinking about refinancing your home loan, a mortgage broker can really help simplify the process.


With so many different lenders and products on the market and every lender using different criteria to set their rates, it can be really daunting to start the process. That’s one of the many benefits of working with a mortgage broker. We can do the research and shop around on your behalf and make sure you get access to deals that best suit your personal circumstances.

Researching and comparing loans can be confusing and time-consuming.⁣ According to a recent MFAA survey, 70% of Aussies now use a broker to land a loan. That's because we can help you with:⁣

  • Saving time (and money) - we’ll do the legwork for you and seek out competitive rates.⁣

  • Targeted research - we’ll find the right type of loan for you. And go for lenders more likely to approve your application. ⁣

  • Expert guidance - we'll help you organise your finances, source the documents you’ll need, and handle the application process.⁣

If you haven’t refinanced in a while, drop us a line, and let’s chat about whether home loan refinancing is a good option for you.


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