Reasons to Refinance

Refinancing simply means paying out your current home loan by taking out a new loan, either from the same provider or a different one. There are plenty of reasons to consider refinancing your home loan and benefits associated if utilised correctly. There is an opportunity to save money by refinancing, but it's important to understand what's involved as not all loans are as simple as they may sound and not all of them will suit your unique circumstances.

Reasons to refinance

When selecting your first home loan, you would have picked the one that was most suited to your situation at the time. As time passes, your situation may change and you might find there's a better home loan option available to suit your new needs. There are various reasons for home loan refinancing, let's take a closer look at the most common reasons for refinancing.

Debt consolidation

Debt consolidation is essential the process of rolling high interest debts such as credit cards and personal loans into one loan, usually with a lower interest rate. Easy to manage with only one loan to monitor as well as the opportunity to save you a lot of money. The interest rate on a home loan is generally substantially lower than other kinds of credit, so consolidating your debt into a low interest account like your mortgage can be a smart option for saving money.

Renovating your home

Renovating your property can add value to your property and increase your standard of living. There are typically only two main types of loans to consider when renovating, line of credit home loans and construction home loans.

A line of credit home loan allows you to use the equity you have in your property to make cosmetic improvements. A line of credit loan can only be utilised when you have an available amount of equity in your home to use. Learn more about home equity. 

Construction loans can be used for making structural changes in your home, such as adding an additional room to your home. They provide the opportunity to borrow larger amounts of money dependent on the predicted value of the property once the renovations are finished.

Obtaining a cheaper rate

To remain strong contenders in what is a very competitive mortgage market, banks and lenders are regularly introducing new home loan products with low interest rates. In such a fast paced industry, a couple of years from the time you got your original loan can make a big difference to what's available. We suggest speaking to your mortgage broker for an annual home loan health check to see if you are still on the most competitive interest rate. 

Accessing different loan features

With the ever changing face of the mortgage market, new types of loan features and packages as well as changes to your current loan are introduced regularly. With new loans on the market, you may find new loans that offer you access to more flexible features providing you the opportunity to save and manage your funds more appropriately to match your current circumstances.

Some of these features include:

  • Flexible repayments - allows you to make additional repayments to reduce the time of your loan
  • Redraw facility - allows you to withdraw any extra repayments in case you need the cash immediately
  • Flexible rate - allows you to alternate between a variable and fixed rate, or a split loan between the two in order to keep up with the changes in interest rates
  • Portability - makes it possible to take your loan with you when you move, sometimes saving you money on fees.


If you already have equity built up in your current home, refinancing may allow you to access the equity to help you purchase an investment property. If you're looking to build an investment portfolio this can be a very useful technique to unlock further investment opportunity. Refinancing to invest is an important decision, your local mortgage broker can evaluate how much equity you have and see if this is a suitable option for you. Find out more about investing.

Seek professional advice

There are so many different paths you can take when it comes to refinancing, all dependent on your situation and reason for wanting to refinance your home loan. If you speak to a broker they can help you determine which loan will be able to meet your needs. Seeking professional advice is crucial to avoid financial risk and poor planning.

Speak to us today to find out if refinancing is an option for you.

About the author

My Local Broker is a dedicated team of experienced, nationally recognised mortgage professionals who are inspired by one vision:"To redefine the mortgage lending experience, providing local, personalised attention to each of our clients using advanced lending technology to enhance your experience, saving you time with simple, yet efficient processes."