Why you should consider refinancing at least every five years

While refinancing can be a great move for some borrowers, it’s not suitable for everyone. It also involves some costs. So it’s important to crunch the numbers and consider your personal circumstances before making any moves.

02 February 2022

What were you doing five years ago? Perhaps you’d just started a new business, graduated from university, gotten married or received an exciting promotion.

Whatever the case, it’s likely a lot has changed in your life in the five years since.

Australia’s competitive home loan marketplace has also moved a lot in the past five years. New lenders have entered the market, new products have been released and interest rates have significantly changed.

No, this isn’t unusual – every five-year period is filled with change.

That’s why although your home loan might’ve been a great fit five years ago, there’s a good chance it’s no longer the best option for your circumstances today.

How refinancing can save you money

Imagine, five years ago, you took out a $500,000 home loan with a 30-year loan term and an interest rate of 3.59%. That would translate into monthly repayments of $2,270.

Now imagine, five years into your mortgage, your principal has been reduced to $449,000 and you refinance to a loan just 50 basis points lower, at 3.09%. That would reduce your monthly repayments to $2,150 – saving you $120 per month and about $36,000 over the remaining 25 years.

Other reasons to refinance your home loan

Saving money isn’t the only reason to consider refinancing. Other reasons include:

  • Paying off your home loan sooner by reducing your loan term
  • Getting access to flexible features, such as offset accounts and redraw facilities, that can save you money
  • Streamlining your finances by consolidating high-interest debt into your home loan
  • Unlocking equity to fund a renovation or buy an investment property

Should you stay or should you go?

While refinancing can be a great move for some borrowers, it’s not suitable for everyone. It also involves some costs. So it’s important to crunch the numbers and consider your personal circumstances before making any moves.

Want to save money by refinancing your home loan? Vie Financial can help you work out if it’s the right decision for you. Call us on 1300 400 843 or fill in this enquiry form.