Do you know when refinancing your mortgage makes sense?

Why refinancing your mortgage matters right now

Refinancing your home loan means switching from your current lender to a new one, or renegotiating your existing loan to access a lower interest rate, different loan structure, or improved features. For homeowners in Cannon Hill, refinancing can reduce your monthly repayments, unlock equity for investment or renovations, or consolidate debts into your mortgage to improve cashflow.

The decision to refinance depends on your current loan structure, how much equity you've built in your property, and whether your lender is still offering competitive terms. Many borrowers in Cannon Hill are stuck on high rates after their fixed rate period ended, or they've been with the same lender for years without reviewing whether their loan still fits their circumstances. A home loan health check can show you whether you're paying too much interest or missing out on features like an offset account or redraw facility.

When a lower interest rate justifies the switch

If the interest rate difference between your current loan and what's available elsewhere is at least 0.5%, refinancing is usually worth considering once you account for application fees, discharge costs, and any break costs if you're coming off a fixed rate early. At current variable interest rates, even a 0.7% reduction on a loan amount of $500,000 could save you over $3,000 per year in interest.

Consider a homeowner in Cannon Hill who took out a fixed rate loan three years ago at 4.8%. Their fixed rate expiry is approaching, and their lender's revert rate is 6.2%, but they could refinance to a variable interest rate of 5.9% with an offset account included. Over the next five years, that 0.3% difference would save roughly $7,500, and the offset account adds further value if they can park their savings there to reduce the interest charged. The refinancing process takes four to six weeks, and the upfront costs are typically around $1,500, making the switch financially sound.

Accessing equity for your next investment or renovation

Refinancing lets you access equity in your property without selling it. If your Cannon Hill home has increased in value since you purchased, you can release equity to fund a deposit on an investment property, complete renovations, or consolidate other debts. Lenders will typically allow you to borrow up to 80% of your property's current valuation without paying Lenders Mortgage Insurance.

Cannon Hill has seen consistent property value growth due to its proximity to the Gateway Motorway, Whites Hill Reserve, and well-regarded local schools like Cannon Hill Anglican College. If you purchased a home here five years ago and your property valuation has increased, you may now have access to substantial equity. A cash out refinance allows you to unlock that equity and use it for another purchase or to improve your current home. If you're planning to buy an investment property, the equity release can cover your deposit and some of the upfront costs, letting you move forward without needing to save for years. You can read more about how we structure investment loans alongside refinancing.

Consolidating debts into your mortgage

If you're carrying personal loans, car loans, or credit card debt with interest rates above 8%, consolidating those debts into your mortgage can reduce your overall interest costs and simplify your repayments. Mortgage interest rates are significantly lower than most consumer credit, and combining everything into one loan means one repayment and often a lower monthly outgoing.

In our experience, clients refinancing to consolidate debt see an immediate improvement in cashflow. A borrower with $30,000 in personal loans at 10% and $15,000 on a credit card at 18% might be paying over $1,200 per month across those debts. Consolidating that $45,000 into a mortgage at 6% could reduce the monthly repayment to under $300, freeing up income for other priorities. The trade-off is that you're extending the repayment period, so you'll pay more interest over the life of the loan unless you make extra repayments. Still, the immediate cashflow benefit and lower rate make it a viable option for many homeowners looking to reduce loan costs and regain control of their finances.

What the refinance application involves

The refinance process starts with a loan review to confirm your current loan structure, interest rate, and remaining balance. You'll need to provide recent payslips, tax returns if you're self-employed, and a property valuation arranged by the new lender. The new lender assesses your borrowing capacity based on your income, expenses, and the equity in your property.

Once your refinance application is approved, the new lender handles the discharge of your existing loan and settles the new one. If you're coming off a fixed rate, check whether break costs apply. These are charged by your current lender to cover the cost of you exiting the loan early, and they can range from a few hundred dollars to several thousand depending on how much time is left on your fixed rate period and how much rates have moved since you locked in. You can find more detail on how those costs are calculated on our fixed rate expiry page.

Improving loan features without changing your rate

Sometimes refinancing isn't about chasing a lower rate. It's about gaining access to features your current lender doesn't offer. A refinance offset account lets you park your savings in a linked transaction account, reducing the interest charged on your loan without locking that money away. A redraw facility lets you access extra repayments you've made if you need the funds later. Some lenders also offer the ability to split your loan between fixed and variable, giving you rate certainty on part of your loan while keeping flexibility on the rest.

If you're with a lender that doesn't offer an offset account or charges monthly fees for basic features, refinancing to a lender with better inclusions can improve your financial flexibility without necessarily lowering your rate. The value of an offset account depends on how much you can keep in it, but even $20,000 sitting in an offset linked to a $400,000 loan will save you roughly $1,200 per year in interest at a 6% rate.

When refinancing doesn't make sense

Refinancing isn't always the right move. If you're planning to sell your property within the next 12 months, the upfront costs of refinancing may outweigh any interest savings. If your current loan has significant break costs because you're locked into a fixed rate with years remaining, the cost of exiting early might exceed what you'd save by moving to a lower rate.

You should also consider your borrowing capacity. If your income has dropped, your expenses have increased, or your employment situation has changed since you first took out your loan, you may not qualify for the same loan amount or rate. A loan health check will show whether refinancing is viable based on your current circumstances and help you weigh the costs against the potential savings.

If you're weighing up whether mortgage refinancing makes sense for your situation, call one of our team or book an appointment at a time that works for you. We'll review your current loan, compare refinance rates, and show you what's available based on your equity, income, and goals.

Frequently Asked Questions