Should You Refinance Your Mortgage?

Pay it off faster, tailor it to your life, or just get some breathing room

Let’s get one thing straight: no one wakes up on a Sunday morning, pours a flat white, and says, “You know what sounds fun? Reviewing my mortgage.” Yet here we are.

If you’ve got a mortgage – or several – chances are you’ve wondered whether you should refinance. Whether it’s to save money, free up cashflow, fund a renovation or other project, or finally do something about that pesky floating rate that’s been quietly nibbling away at your pay packet.

So, let’s explore the topic in plain English to help you decide whether refinancing is worth a second look – and how to take ownership of your mortgage, instead of letting it own you.

Background: When A Fixed Mortgage Term Ends

When your fixed rate mortgage comes to the end of its term, most lenders (banks) will offer you a new fixed rate or automatically roll the loan onto a floating rate.

As a homeowner, this type of fix-and-forget arrangement might sound convenient, but it also means you could miss out on the opportunity to refinance your mortgage – which can potentially save you significant amounts of money in the long-run or offer other benefits.

Instead of just taking the rates they offer, it could be a great idea to shop around. Refinancing a mortgage can be more complex than it might first seem. Making the right decision takes time, research, and a good amount of forward-planning.

What is Refinancing a Mortgage?

Refinancing is the process of transferring your existing home loan from one bank to another. When you refinance, you’re essentially repaying your existing loan, then taking out a new loan at a different bank.

1. Why Refinance? Because Life Happens

Refinancing isn’t just about chasing a better mortgage interest rate. It’s about making your mortgage work for you. Because guess what? Life changes.

You might:

• Get a pay rise (nice work!)
• Add another child or pet to the family
• Want to invest in another property
• Start or buy a business
• Need more flexibility or less pressure

Refinancing lets you restructure your loan to reflect the life you’re living now, not the one you imagined five years ago.

Refinancing is about the big picture and overall benefits. The benefits might include to:

• Pay down the mortgage faster by switching to a lower rate or shortening the loan term.
• Increase flexibility. For instance, moving from fixed to floating or vice versa, or even transitioning to interest-only repayments so you can dedicate a regular cash surplus to something else.
• Consolidate bad debts such as credit cards, car loans, and personal loans.
• Free up cash via equity release for renovations, investments or emergencies.
• Take advantage of another bank’s products or services.

Refinancing is ultimately about control. The kind of control that lets you be deliberate about debt management, not reactive.

2. Paying it Off Faster: Your Mortgage Versus Your Goals

Want to pay your mortgage off faster? Good news: refinancing can help you do just that.

Let’s say you’re five years into a 30-year mortgage. Interest rates have dropped, and your income has gone up: nice work! By refinancing to a lower rate and committing to higher repayments, you can shave years off your loan term. That’s real money saved.

Here’s a simple example, so you can see the real impact:

• ‍Original mortgage: $600,000 over 30 years at 6.5%
• Original monthly repayment: approx. $3,792
• Refinanced mortgage: $600,000 at 5.5% interest, but keeping the same monthly repayment of $3,792

You’d repay the mortgage in full just over 23.6 years, instead of 30. You’d save approximately $ 294,213 in interest.

That’s nearly six and a half years shaved off your mortgage—simply by refinancing and maintaining the same repayment level. No extra sacrifice. Just smarter structuring.

The trick in this case? Using the savings to pay the mortgage down, not upgrade your Netflix plan to Ultra Premium. Though let’s be honest, it is nice to see David Attenborough in 4K.

Even an extra $50-$100 per week, sustained over time, can make a meaningful dent.

3. Flexibility: Debt That Bends, Not Breaks

Oftentimes, it’s not about paying off the mortgage faster – it’s about breathing easier. A rigid mortgage structure can become a straitjacket when life gets unpredictable.

Refinancing can allow for:

• Split loans: part fixed, part floating.
• Offset accounts: linking savings to reduce interest.
• Interest-only periods: useful for investors or temporary cashflow changes.
• Ability to make lump-sum repayments: without penalties.

There could be any number of reasons why you’d seek a more flexible mortgage arrangement such as these. It might be so you can take a career break – perhaps to raise a family or study or travel – it might be to change careers, it might be to invest a larger surplus elsewhere (for example, in another property), or just about anything you can think of!

Life doesn’t move in neat 5-year fixed-term increments. Your mortgage shouldn’t either.

Think of it like this: a well-structured loan is like activewear – it stretches with you, and most certainly doesn’t chafe.

4. Tailor It To Your Strategy (Yes, You Should Have One)

Whether you’re a first-home buyer, seasoned property investor, or somewhere in between, your mortgage should reflect your strategy.

If you’re investing, that might mean:

• Using interest-only to maximise cashflow
• Releasing equity to fund another deposit
• Consolidating across lenders to reduce admin and improve leverage, or the opposite approach to make the most of a multi-bank arrangement

If you’re focused on becoming debt-free:

• You might fix for certainty and plan an aggressive repayment schedule
• Or you might go floating to pay off chunks when windfalls such as bonuses come in

Your mortgage is a tool. Used wisely, it can build wealth. Used passively, it just builds interest for the bank.

5. How To Refinance Your Mortgage

Step 1: Confirm Your Reasons For A Refinance

Start with the end in mind, as it could be your goals might be better achieved by staying with the same lender and instead restructuring or refixing. It’s important to make sure refinancing is the best solution.

Step 2: Explore The Costs of Refinancing

Refinancing sounds great – and it often is. But it’s not free.

You need to weigh:

• Break fees if you’re exiting a fixed term early.
• Legal fees for conveyancing.
• Bank fees sometimes waived, sometimes not. You might even have cash reward clawbacks (when you must repay your cash rewards) from your existing bank, commonly this happens for a 3-4 year period from when you first took out your lending.
• The temptation to borrow more when equity increases.

Get advice before you jump. A quality mortgage adviser (hi, that includes our lending team here at Become Wealth) can run the numbers, forecast different scenarios, and help you avoid expensive mistakes. Usually this will happen free of charge to you, as the banks pay us to provide the service.

Step 3: Research

Once you’ve looked at your reasons and possible costs, it’s time to do some research.

As mentioned earlier, it can be tempting to focus on rate-shopping but always look past interest rates alone.

Some banks may have additional offers, such as cash contributions or no application fees, so it pays to compare more than just interest rates.

Step 4: Talk To Your Bank

It’s also important to talk to your existing bank. Ask for a clear picture of any costs associated with early termination.

This is a great opportunity to talk about your financial goals and your reasons for refinancing.

(By researching competitors to your existing bank first, in steps two and three, you’ll go into this talk well-informed).

Step 5:  What Happens Next?

If you decide to go ahead with refinancing, here’s what generally happens next:

• You’ll fill out a loan application, provide bank statements, proof of income and anything else the bank requires.
• Your new bank will decide whether to approve the loan.
• If the loan is approved, the bank will send you a letter of approval outlining your new terms.
• You will decide on the new structure you want for your new home loan.
• You’ll work with a lawyer to sign any necessary documents for the new home loan and provide them with a new insurance certificate showing your new bank.
• Your mortgage will officially be refinanced.

The Bottom Line: Should You Refinance an Existing Mortgage?

Refinancing isn’t a magic wand. But done wisely, it can be one of the best financial decisions you make in a decade.

It can:

• Save you tens of thousands in interest.
• Help you retire earlier.
• Increase your flexibility, to make your mortgage less of a burden and more of a tool.

Or, if you ignore it completely, your mortgage will just keep chugging along for 25 years while you pay for the bank shareholders next golf trip.

What to do next:

1. Book a complimentary mortgage review with our lending team. There’s no pressure, and it could save you thousands.
2. Ask questions. We’ll explain everything in plain English.
3. Act. Because waiting is not a strategy.