Refinancing Advice
Lenders reserve their sharpest pricing for new customers. Existing borrowers who never ask are quietly the most profitable ones. If you have not reviewed your loan in a few years, there is a reasonable chance you are paying more than someone who walked in the door last month with the same financial position.
What refinancing advice involves
Refinancing means replacing your existing loan, either with a different lender or with a different product from the same lender. People do it to reduce the rate, to access equity, to consolidate debt, to change the structure, or to get out of a loan that no longer fits.
It is not automatically worth doing. Switching has costs, it requires a fresh assessment of your finances, and a lower rate on a longer term can cost more overall. The useful question is not whether a better rate exists, but whether switching leaves you better off once everything is counted.
How a mortgage broker helps with refinancing
Reviewing what you currently have
Before looking at other lenders, we look at yours. Sometimes the best result is your existing lender repricing your loan, which is faster and cheaper than switching. Lenders will often do this when asked properly, and rarely when not asked at all.
Comparing the real cost of switching
Discharge fees, application fees, valuation costs and potential lenders mortgage insurance all offset the saving. Where you are on a fixed rate, break costs can be substantial. We work out the point at which switching pays for itself.
Accessing equity
If your property has increased in value, you may be able to borrow against that increase, whether for renovations, an investment property, or another purpose. What you use the funds for affects how the loan is structured and how it is treated for tax, which is worth getting right at the outset.
Debt consolidation
Rolling personal loans, car loans or credit cards into your mortgage reduces your repayments, and it also stretches short term debt across a much longer term. That can mean paying substantially more in total interest. It suits some situations and is a poor decision in others. We will tell you which one yours is.
Restructuring
Changing from interest only to principal and interest, splitting a loan, adding an offset account, or separating investment debt from personal debt. Structure often matters more than rate, particularly where investment property is involved.
Fixed rate expiry
When a fixed period ends, most loans revert to a rate that is rarely competitive. This is one of the most common and most expensive moments to do nothing. It is worth acting before the expiry rather than after.
Speak to our experienced team today.
Refinancing by situation
1 – Your fixed rate is about to expire
The reversion rate is usually well above what is available. Worth reviewing before the fixed period ends, not after.
2 – You have not reviewed your loan in several years
The most common situation. Loyalty is rarely rewarded in mortgage pricing.
3 – Your property has increased in value
More equity can mean access to better pricing tiers as well as the ability to borrow more.
4 – You want to renovate
Accessing equity is usually cheaper than a personal loan, and how the loan is structured matters if part of the property is or will be an investment.
5 – You have multiple debts at different rates
Consolidation can help or can cost you, depending on the terms and how long the debt has left to run.
6 – Your income has changed
A refinance means a fresh assessment. If your income has dropped or your situation has become more complex, this affects what is available and is worth understanding before you apply.
7 – You are separating from a partner
Removing someone from a loan requires a refinance and a fresh assessment on the remaining income.
8 – You are approaching retirement
Loan terms extending past your working life are assessed differently, and lenders will want to understand how the loan will be repaid.
Who this is for
- Borrowers whose fixed rate is ending
- Anyone who has not reviewed their loan in several years
- People wanting to access equity for renovations or investment
- Borrowers whose circumstances have changed since the loan was written
Who this isn’t for
- Anyone who refinanced very recently and has not had a change in circumstances. The costs are unlikely to be worth it.
- Borrowers looking to consolidate debt as a response to serious financial hardship. Free financial counselling through the National Debt Helpline is a better first step, and we will point you there.
Our advice process
01 Evaluation
02 Discovery
03 Strategy
04 Implementation
05 Review
Refinancing FAQs
Is it worth refinancing?
It depends on the size of the saving against the cost of switching. Discharge fees, application fees, valuation costs, and break costs on a fixed rate all count against the benefit. A meaningful rate difference on a large balance usually pays for itself quickly. A small difference on a small balance often does not.
What does it cost to refinance?
Costs typically include a discharge fee from your existing lender, government registration fees, and sometimes an application or valuation fee from the new lender. If you are breaking a fixed rate, there may be a break cost, which can be significant. If your equity is below a lender’s threshold, lenders mortgage insurance may apply again.
Can I refinance if my fixed rate has not ended?
Yes, but there may be a break cost, which depends on how much time is left and how rates have moved since you fixed. Sometimes the saving still outweighs it. It is worth asking your lender for the actual figure before deciding, as estimates can be well off.
How much equity do I need to refinance?
It varies by lender. Generally the more equity you have, the more options are available and the better the pricing tiers you can access. Refinancing with limited equity is often possible but may trigger lenders mortgage insurance again, which usually undoes the benefit.
Should I consolidate my debts into my mortgage?
Sometimes. It reduces your monthly repayments and usually lowers the interest rate on that debt. It also spreads short term debt over a much longer term, which can mean paying more in total. It works best where the consolidated debt is then paid down deliberately rather than left to run for decades.
Will refinancing affect my credit score?
Applying for credit is recorded on your credit file, and multiple applications in a short period can affect how lenders view you. This is one reason to identify the right lender before applying rather than applying to several and seeing what happens.
Can I refinance if my income has dropped?
Possibly, though a refinance means a fresh assessment against current lending criteria. If your income has fallen or your circumstances have become more complex, your options may be narrower. In some cases your existing lender repricing your loan is a better route than switching.
How long does refinancing take?
It varies by lender and by how complete the application is. Discharging the existing loan adds a step that a new purchase does not have. Applications with all documentation in order move considerably faster.