Common refinancing questions, answered

Got a refinancing question that you’ve been too shy to ask? We got you!

We’ve answered some of the most common questions relating to refinancing a home loan in this blog article. It’s been said before, and we’ll definitely say it again – there’s no silly questions when it comes to banking and your finances!

“Why do people refinance?”

There are generally six reasons homeowners decide to refinance, and these are:

• a lower interest rate
• a different loan type (variable vs. fixed rate, principal and interest vs. interest-only)
• to change the loan term
• to access home equity
• to access better loan features (redraw or offset, for example)
• to consolidate debts.

“What are the benefits of refinancing?”

Refinancing is beneficial when it results in significant savings, improved loan terms, or aligns better with your long-term financial goals.

• Lower interest rates and reduced monthly payments can allow homeowners to make their money go further and reduce their outgoings.
• A shorter loan term will result in being debt free, sooner.
• Switching from a variable rate home loan to a fixed rate one can help with budgeting.

“How does refinancing save a homeowner money?”

Refinancing a loan can save money by reducing the interest rate, which reduces the monthly repayments that need to be made. In turn, this lowers the total interest paid over the life of the loan.

“Are there disadvantages to refinancing?”

Disadvantages will vary depending on your personal circumstances and financial situation. Potential drawbacks include the costs and fees that can be incurred by switching home loans. The possibility of extending the loan term also won’t work for everyone, as it can increase the total interest paid over the life of the loan.

“When should I refinance?”

Refinancing isn’t suitable for all homeowners at the same time or stage of property ownership. To benefit from refinancing, consider it when:

• interest rates drop below your current home loan rate
• you want to change the term of your loan for financial flexibility
• you need to consolidate multiple debts to provide financial breathing room.

“How do I refinance?”

To refinance your home loan, you’ll need to apply for a new loan with your bank or another lender. This means you will go through the approval process like you did when you initially got your loan, so you’ll need to supply all the relevant documentation. If your loan application is approved, the new loan will pay off your existing one.

“Can I refinance my home loan with the same bank?”

Yes, you can refinance your home loan with the same bank or lender. Many banks offer refinancing options for existing customers. If you want to speak to with our team about a current P&N Bank home loan, please get in touch.

“How many times can I refinance?”

There is no specific limit to how many times you can refinance a home loan, but each refinance will likely involve costs. You may need to pay discharge or contract variation fees (depending on your loan and your lender), so it’s always important to consider the financial implications of refinancing.

It’s also worth noting that, just like with any application for credit, each refinance (and application to refinance) will be recorded on your credit report. You can learn more about your credit rating in this blog.

“How soon can I refinance after purchase?”

This will vary depending on the reason for the change. Some lenders may have specific waiting periods in place before you’re able to refinance your loan with them, so always check your contract and loan documentation. And remember to weigh up all the associated costs.

“Do you get more money when you refinance?”

Refinancing typically doesn’t provide additional funds unless you choose to borrow more than your principal and increase your loan amount. If you’re looking at refinancing to help fund home renovations, we have some further information here.

If refinancing is on your to-do list, we can help you tick it off. With flexible options and competitive rates, you’ll wish you talked to us sooner. We have a team of home loan specialists ready to assist you – make an appointment here.