Many homeowners think refinancing is only worthwhile when interest rates drop significantly. The truth is, even a small rate change can make a big difference to your long-term finances.
For example, reducing your home loan interest rate by just 0.25% on a $500,000 mortgage could save you over $20,000 in interest across a 25-year term. That’s money that could be invested, used for renovations, or simply kept in your pocket.
Why Annual Reviews Matter
Interest rates, lending policies, and your personal financial profile can change every year. Reviewing your loan regularly gives you the opportunity to:
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Take advantage of lower rates – Lenders often offer better deals to attract new customers.
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Benefit from improved borrower profile – If your income has increased, your credit score has improved, or your loan balance has decreased, you may now qualify for a better rate.
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Avoid the “loyalty tax” – Staying with the same lender without negotiating can mean paying more than new customers for the same product.
Refinancing Isn’t Always Just About Rates
While a lower interest rate is a strong reason to refinance, other benefits can include:
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Consolidating debt into your home loan to lower overall repayments.
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Switching from a variable to a fixed rate (or vice versa) to match your financial strategy.
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Accessing equity for renovations, investments, or other large expenses.
The Bottom Line
Refinancing can seem like a hassle, but the potential savings — even from a small rate reduction — can be substantial over time. The key is to compare offers, understand the total cost of switching, and ensure the terms suit your financial goals.
Want to find out if your current home loan is costing you more than it should?
Call/WhatsApp: +84 96 275 92 07
Email: support@sw-globalfinance.com.au