How to Get the Most Out of Your Refinance: Tips to Lower Your Rate & Improve Your Terms

Refinancing can help you review your current home loan and potentially improve your interest rate, loan features, or repayment structure. To get the most out of a refinance, borrowers should understand their existing loan, review fees and terms carefully, improve their financial position where possible, and compare how different lenders assess applications. Refinancing outcomes vary based on personal circumstances, lender policies, and market conditions, so preparation and professional guidance are essential.

Start by Understanding Your Current Loan

Before refinancing, it’s important to clearly understand what you already have. This includes your current interest rate, whether it’s fixed or variable, the remaining loan term, repayment type, ongoing fees, and any features such as offset accounts or redraw facilities. You should also check whether break costs, discharge fees, or other charges apply, as these can affect whether refinancing is worthwhile.

Review Your Financial Position Before Applying

Lenders reassess your finances when you refinance, just as they would for a new loan. This usually includes reviewing your income, living expenses, existing debts, and credit history. Some borrowers choose to prepare by reducing unsecured debt, reviewing discretionary spending, or building savings buffers. These steps don’t guarantee approval or better terms, but they may help present a clearer financial position to a lender.

Look Beyond the Interest Rate

While interest rates often get the most attention, they’re only one part of the overall loan picture. Loan features, fees, flexibility, and repayment options can all affect how suitable a loan is for your situation. For example, some loans may have lower rates but fewer features, while others may offer flexibility that better suits your long-term plans. Comparing the total structure, not just the headline rate, is important.

Consider Whether Loan Terms Still Suit Your Needs

Over time, your circumstances may change. A loan that suited you five years ago may not suit you now. Refinancing can allow borrowers to review elements such as loan length, repayment type (principal and interest or interest-only), or access to features like offset accounts. Any changes should be considered carefully, as extending loan terms or changing structures can affect total interest paid over time.

Understand the Costs Involved in Refinancing

Refinancing can involve costs, including lender discharge fees, application fees, valuation fees, and government charges. These costs vary depending on the lender and loan structure. It’s important to factor these into any refinance decision rather than focusing solely on potential interest rate differences.

When Refinancing May Not Be Suitable

Refinancing isn’t always the right move. In some cases, costs may outweigh benefits, fixed-rate break fees may be significant, or a borrower’s circumstances may not align with lender requirements at that time. That’s why it’s important to consider refinancing as a review process rather than an automatic solution.

Getting the most out of your refinance starts with preparation and understanding, not assumptions. By reviewing your existing loan, understanding costs, considering your broader financial position, and seeking professional guidance, you can make informed decisions about whether refinancing is appropriate for your situation. Work out what would work best for you with BrokerCo’s general guidance.