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When Would I Refinance My Mortgage?

Whenever it makes financial sense to do so.

Heard about mortgage refinancing? In the past, people who took out a mortgage doggedly continued with it until they had repaid it. Today people refinance much more frequently. The average duration of an Australian home loan now is just 4-5 years. Here are some of the reasons people in Australia refinance their home loan.

Mortgage refinancing reasons: lower rate

The most common reason for people to refinance is to get a better deal. But be careful you don’t become too fixated on interest rates. You need to consider fees and charges as well as the interest rate when looking to refinance your home loan. You often have to pay fees for exiting your current home loan, plus fees for taking out a new mortgage. You need to be sure that in refinancing your home loan that you’ll be better off in the long run after taking into account all costs.

Mortgage refinancing reasons: more flexibility

Many people only discover the fine print about their mortgage when it’s too late. They try to do something and get told by their lender that either it cannot be done with that product, or they will incur a hefty charge if they do. An example is a redraw facility – the ability to pay extra money into a mortgage and then draw it down later. This feature is not available on a basic home loan, so many people refinance their mortgage to give themselves this sort of increased flexibility.

Mortgage refinancing reasons: renovation

If you carry out renovations, it often makes sense to refinance your mortgage and take out a construction loan so you only pay interest as progress is made on the build. Once construction is over, it might make sense to refinance your home loan again so that you consolidate the total amount you owe into a loan that minimises your interest bill, while giving you a degree of liquidity.

Mortgage refinancing reasons: home equity

Over recent years in the property market houses have appreciated at a significant rate. For example, a home you bought for $200,000 ten years ago, might now be worth $400,000. Refinancing your mortgage with a home equity loan might let you tap into that extra $200,000 equity.

Mortgage refinancing reasons: defaulting

Some people find they have borrowed more than they can comfortably afford, and they’re in danger of defaulting. There’s no shame in that and whatever you do, don’t suffer in silence. If you’re having trouble making your mortgage repayments, talk to your mortgage broker about refinancing your home loan to make it more manageable.

Do you need advice? Call Chris today on 0490 075 039 or send an email to

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