When Should I Refinance My Home Loan?
There's a version of this conversation we have regularly with clients on the South Coast and Illawarra.
A homeowner comes in. Sometimes they've had the same loan for five or six years, sometimes longer. They've heard rates have moved, or a friend mentioned they saved hundreds a month after refinancing, and they want to know if they should be doing something about their loan.
The short answer is that it depends. But there are some clear signals that tell us a review is overdue.
You Haven't Reviewed Your Loan in Two or More Years
The lending market moves. Lenders reprice constantly, and not always to your benefit. The rate you locked in two years ago may have been competitive then. Today, there's a reasonable chance it isn't.
If you haven't had your loan reviewed recently, that's enough reason on its own to start the conversation. A loan review costs you nothing and takes less time than you'd expect.
Your Rate Starts With a High Number
This sounds vague, but it's a useful gut check. If your interest rate has a ‘6’ at the front, or higher, and you haven't recently locked in a competitive fixed rate, it's worth finding out whether there's something better available.
We're not talking about chasing the lowest advertised rate in the country. We're talking about making sure your rate reflects your current circumstances and loyalty as a borrower, because lenders often offer their best rates to new customers rather than existing ones.
Your Circumstances Have Changed
Major life changes often change your lending picture too:
You've paid down a significant amount of your loan, which may have changed your loan to value ratio (LVR). A better LVR bracket often unlocks better rates
Your income has increased, improving your borrowing profile
Your household structure has changed. A partner has returned to work, children are older, or debt has been paid down
You're now self-employed and your financials look stronger than when you first applied
Any of these can change what's available to you, and a broker can assess that quickly.
You're Paying for Features You Don't Use
Some loans come with an offset account, redraw facility or other features that carry a cost, either through a higher rate or ongoing fees. If you're not actually using those features, you may be paying for something that isn't adding value.
Equally, if you're not on a loan with an offset account but you regularly hold savings, that's worth looking at. The right structure can save meaningful money over time.
You Want to Access Your Equity
If your property has increased in value, and across much of the Shoalhaven and Illawarra, properties have moved significantly in recent years, you may now have equity available that could fund a renovation, an investment property, or another goal.
Refinancing to access equity isn't the right move for everyone. But if it's something you're thinking about, it's worth a proper conversation to understand what's available and what it would actually cost you.
What Refinancing Actually Costs
One of the things that holds people back is the assumption that refinancing is complicated or expensive. In many cases, it's neither.
Discharge fees, break costs on fixed loans, and application fees are real considerations. But for most variable rate loans, the out of pocket costs are modest compared to the potential savings. Your broker should give you a clear comparison before you make any decision.
When Refinancing Might Not Be Worth It
Not every refinance makes sense.
If you're close to paying off your loan, the savings window is short and switching costs may outweigh the benefit. If you're on a fixed rate with significant break costs, timing matters. And if your financial position has changed in ways that might affect your borrowing profile, it's worth understanding that before applying anywhere.
A good broker will tell you when refinancing doesn't stack up, not just when it does.
The Bottom Line
Refinancing isn't about jumping at every rate movement. It's about making sure your loan continues to work for your situation, not just the situation you were in when you first signed.
If it's been a while since you've looked at your home loan, let's change that. A conversation takes thirty minutes, and the clarity it gives you is worth much more.
It starts with a coffee.
The Shorebreak Finance team is based in Berry and works with homeowners across the Shoalhaven, Illawarra and South Coast.
Reach out anytime.