5 Times You Should Refinance (and 4 Times You Shouldn’t)

Refinancing your home loan can be a more complicated decision than it first appears. If you see a better rate being advertised, it doesn’t necessarily mean you’d be better off switching lenders. But done right, refinancing might save you thousands over the lifetime of your loan.

Here are the 5 biggest clues you should make a change

1. You’re no longer getting a competitive rate
2. When you want to switch to a fixed rate and there’s a great deal available
3. You need finance for renovations or investments
4. You need to consolidate your credit card debts
5. You’ve had a major change in your financial circumstances such as reduced income, loss of employment, separation or divorce, or changes in health

And here are 4 reasons to stick with your current lender

1. Competitor rates aren’t vastly different and you have a good relationship with your lender
2. You’re intending to sell your property soon
3. Your income will be uncertain or your credit history has worsened
4. Your remaining balance is low and you don’t want to use the equity

Having a low rate for your mortgage repayments is great, but it’s worth thinking about the bigger picture. Changing lenders can come at a cost, so you need to consider the impact over the life of your loan and take additional fees into account. Your calculations should include any entry or exit fees, application, valuation, stamp duty and legal charges, as well as ongoing fees.

If that all sounds too complicated, remember that’s what your mortgage broker is there for! A good broker will research all your available options and advise you on the best solution for your circumstances. So, if you’re thinking of refinancing maybe it’s time to pick up the phone.