To refinance or not to refinance – that is the question. Shakespeare may be confusing, but refinancing doesn’t have to be. If you’re thinking about making changes to your mortgage but don’t know when to refinance, you’ve come to the right place.
What is Refinancing a Mortgage?
Refinancing is the process where you change the terms of your home loan agreement. Some terms that you may be able to change include your interest rate, your repayment schedule or amount, and the length of your loan.
Refinancing can be very useful, so make sure to keep an eye on your mortgage so you’re aware of any changes to your rate or repayments.
When is the best time to refinance?
When the cash rate is low
Cash Rate Predictions 2023
Because of this, some borrowers will wait to refinance until the cash rate is lower, to take advantage of potentially lower interest rates. Waiting isn’t for everyone, but if the cash rate is high and you’re not in a rush it may be worth waiting for a better rate.
When cashback offers are available
Another good time to refinance might be when a cashback offer is available. Cashback offers aren’t always available, so taking advantage of them when they come around can result in not only a refinance, but a little extra cash in your pocket too.
Cashback offers may depend on how much you’re borrowing, so be sure to look into the conditions of the offer you are considering and make sure your loan is eligible.
Refinancing to access equity
Accessing Your Home's Equity - Its Benefits, Uses, and Costs
Accessing the equity in your home is another way of refinancing. In a nutshell, it relies on you refinancing your mortgage for a higher amount, and the difference between your old mortgage and your new one is paid out to you in cash. Refinancing like this can be useful, as you could use the cash for your renovations instead of taking out a large personal loan.
Accessing your home’s equity is a big move and it can come with risks, so be sure to check out one of our other guides for more information if you’re curious.
Refinance to change repayment schedule
Another indication that it may be time to refinance is if you want to change your repayment schedule. One way to do this is to change the length of your term. Shortening your term may mean you pay less interest over the life of your loan, but you’ll have to increase your repayments. Lengthening your loan may reduce your repayments, but you’ll likely have to pay more interest over your loan term. If you do want to change the length of your term, it’s always better to talk to your lender sooner rather than later.
This article is intended to provide general information of an educational nature only. This information has been prepared without taking into account your objectives, financial situation or needs. Therefore, before acting on this information, you should consider its appropriateness having regard to these matters and the product terms and conditions. Terms, conditions, fees, charges and credit criteria apply. Information in this article is current as at the date of publication.