Should I refinance my home loan?

General advice only · AFSL 222640 · Global Mutual Funds Pty Ltd

The direct answer

Refinancing makes sense when the saving over the time you will keep the loan clearly outweighs the costs: discharge and application fees, fixed-rate break costs, and lenders mortgage insurance if you borrow more than 80% of the property value. Before switching, ask your current lender to reprice — many will reduce your rate to keep you.

What it depends on

The full answer depends on your specific circumstances. Here’s what matters.

Your loan-to-value ratio

If your property value has fallen or you owe more than 80% of it, a new lender may charge lenders mortgage insurance again, which can wipe out the saving.

Your loan term

Refinancing to a new 30-year term lowers repayments but can increase total interest. Keep repayments at the old level if you can.

Your borrowing capacity today

Lenders reassess you from scratch, including a serviceability buffer. Changes in income or expenses may mean you cannot qualify for the new loan.

The last 10%

What a qualified professional can add

The answer above covers the general position. Here’s where professional judgement — applied to YOUR specific situation — makes the difference.

Calculating the break-even point after all fees and costs
Negotiating a repricing with your current lender
Checking you still qualify before a credit enquiry is lodged

Questions to ask before you engage one

If you decide to engage a professional, these questions help you evaluate whether they’re right for your situation.

What are all the costs of switching, in dollars?

How many months until the saving covers those costs?

Will I pay lenders mortgage insurance again?

What rate would my current lender offer to keep me?

Your next step

Call your current lender, quote a competing advertised rate, and ask for a better one. Then compare the result with the total cost of switching.

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