“What does your current loan let you do that the new one won't?”
The answer shows what a rate comparison would miss.
Rate matters. Structure can matter more.
A refinance can lower your rate, and it can also change your security, your loan term and the features you rely on. I compare total cost and what each structure lets you do next, not only the headline rate. Understand the options before you choose the lender.
On my booking page, choose “Initial 15 mins phone call”.
Mortgage broker since 2015 · Brisbane-based, working with clients Australia-wide
What I look at before you switch
Your current loan.
The rate, the term remaining, the features you use and whether any part is fixed.
Total cost, not just rate.
Switching costs set against any rate difference, and how long the payback takes.
Loan term.
Whether a new loan would reset your term, and what that does to total cost.
Valuation and LVR.
Where the new lender's valuation is likely to leave you, and whether lenders mortgage insurance could apply.
Security.
Which properties secure which loans, and whether the restructure could separate them.
Features.
The offset, redraw and repayment options you have now, and what you would give up.
What the money is for.
If you are releasing equity, what the funds will be used for.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.
Policy note
Where a refinance gets complicated
Part of the loan is fixed
- The situation
- You are on a fixed rate with time left to run.
- Why lenders treat it differently
- A lender may charge a break cost when you leave a fixed rate early. The amount depends on the lender, how much of the term remains and how rates have moved.
- What I do about it
- I get the break cost estimate before you decide, and compare leaving now against waiting for the fixed term to end.
The new loan is cheaper each month
- The situation
- The repayment on the new loan is lower, and that looks like the whole story.
- Why lenders treat it differently
- If the new loan restarts a longer term (for example, 20 years remaining becoming a fresh 30), the lower repayment can hide a higher total cost over the life of the loan.
- What I do about it
- I compare like for like: the same remaining term, total interest plus fees, and the payback period.
Your equity is under 20%
- The situation
- The equity in the property is below 20% of its value.
- Why lenders treat it differently
- Lenders mortgage insurance may apply on the new loan and can be substantial, and it may be partially refundable on a switch.
- What I do about it
- I check whether it applies at each lender's likely valuation, and include it in the total-cost comparison.
You want to release equity for another purpose
- The situation
- You want to invest, renovate or restructure using equity in the property.
- Why lenders treat it differently
- A lender assesses the additional debt on your income and commitments. Separately, ATO guidance says interest deductibility follows what the money is used for, not which property secures the loan, and a loan used for both purposes is apportioned.
- What I do about it
- Where the structure allows, I keep separate purposes on separate loans, and I flag the tax question for your accountant.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.
A lower rate that costs you features
- The situation
- A cheaper product doesn't include the offset or redraw you use.
- Why lenders treat it differently
- Features and pricing come as a package, and the lowest rate isn't always on the product that fits how you use the loan.
- What I do about it
- I compare the lower rate against keeping cash accessible and offset flexibility, using your actual balances, and show you both.
Total cost, not just the rate
Rate vs structure
| A lower rate | Keeping offset, split and security flexibility | |
|---|---|---|
| What it gives you | A lower headline rate and possibly a lower repayment. | Cash you can reach and the offset, split and security set-up you have now. |
| What it can give up | The offset or redraw you use, and a longer restarted term can hide a higher total cost. | A lower headline rate on a different product. |
| What I compare | Total interest plus fees over the same remaining term, and the payback period. | Your actual balances under both, so you see both. |
Lender policy
A new lender assesses the whole loan again under its own policy: your income, your commitments and its own valuation of the property. Your current lender prices its own products on its own terms.
What that means for you
Switching can mean a different LVR, different features and a different total cost, so a rate difference on its own doesn't tell you whether switching is worth it. The fair comparison is total cost over the term, including fees.
A general example
A borrower with 20 years left on their loan refinances to a lower rate but takes a fresh 30-year term. The repayment falls, but interest is paid for ten years longer, which can cancel out the benefit of the lower rate.
Worked example: an illustrative scenario, not a client result.
Christine’s view
“A refinance should leave you with more options than the loan you're leaving. If it doesn't, the lower rate is doing less than it looks like.”Christine Junidar
Worked example: an illustrative scenario, not a client result.
Understanding an offset before chasing a repayment shortcut
Understanding how interest is calculated is more useful than relying on a universal shortcut. The option that fits a household depends on its cash needs, costs and loan terms.
Read Christine's view →Fixed vs variable rate home loans: which is right for you?
Read Christine's view →Refinance break-even
It estimates the effect of a rate change from the figures you enter. It can't know your lender's actual fees or the valuation a new lender would obtain.
An estimate only, based on the figures you entered and the assumptions listed beside the result. It is not a borrowing limit, a quote, or an offer of credit. A lender will assess your application against its own criteria.
Where to begin
Tell me what your loan looks like today.
Send me the current rate, the term left, the features you use and what you'd like to change. I'll tell you what I'd compare before you switch, or whether staying put is the better call.
I read every enquiry myself and will be in touch to arrange a time to talk.
General information only. It does not take your objectives, financial situation or needs into account. Lending is subject to lender assessment and criteria. This is not a quote or an offer of credit.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.