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Can I refinance a refinanced home loan?

Have you already refinanced your home loan and are wondering whether you can do it again? Don’t fear — there is no limit on how many times you can refinance.

However, the process isn’t always simple and there are some guidelines to help you decide whether it’s a good idea for you. Keep reading to find out what you need to know about refinancing your home loan (again).

Can you refinance your home loan anytime?

Theoretically, yes you can refinance your mortgage whenever you want, but that doesn’t mean it’s always a good move. The main consideration you should keep in mind is whether refinancing will actually be beneficial and that these benefits aren’t outweighed by the costs.

How long should you wait before refinancing your home loan?

How long you should wait to refinance will depend on your needs and circumstances. If you are content with your home loan and still have a competitive interest rate, you may not need to refinance for a few years — or until your rate is no longer competitive.

On the other hand, if your interest rate is higher than it needs to be, or your financial situation has changed, it may make more sense to refinance sooner. Plus, the importance of finding a suitable lender shouldn’t be understated. A fantastic interest rate can be negated by poor communication or excessive fees from a lender.

For your average borrower, it can be smart to wait until the costs of your previous refinance have been recuperated. In general, have a look into refinancing about every 2 years. Try to keep up with interest rates to make sure you’re still getting a good deal.

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When should you refinance your mortgage?

There are many instances where you should refinance your home loan. For most people, refinancing is an opportunity to save money by securing a lower interest rate. While you can attempt to negotiate a lower interest rate with your current lender, other lenders may just offer more competitive rates all around. Other times homeowners refinance are due to:

  • Changes in employment
  • Live events, such as a death, divorce, marriage, growing family
  • You are moving homes
  • Financial planning to have your home loan inline with your goals (e.g. to buy an investment property).

If you are unhappy with your current lender, you may consider switching to a new lender that better fits your needs.

When is refinancing a bad idea?

In most circumstances, it won’t make sense to refinance if the costs of doing so outweigh the benefits. Some of the common costs associated with refinancing include:

  • Break costs for fixed interest rate borrowers
  • Loan application and establishment fees
  • Adding on an offset account
  • Exit fees for home loans contracted before 1 July 2011
  • Loan maintenance costs
  • Property valuation fees
  • Lenders Mortgage Insurance (LMI)
  • Mortgage registration fees
  • Legal fees

For more information about how much refinancing could cost you, check out our article that outlines what you can expect. Remember that the costs will vary depending on your borrowing profile, home loan preferences and the lender(s) you deal with.

What are some other reasons to refinance your home loan?

There may be exceptions to this where people refinance for different reasons. For example, someone experiencing a loss in income may be forced to refinance their loan to a longer repayment term in order to afford their repayments. This would lower their monthly repayments, but will cost them more in the long run, due to interest and possibly refinancing costs.

More reasons to refinance can include:

  • Wanting to access equity to renovate or purchase another property
  • Refinancing to consolidate your debt from credit cards, car loans and/or personal loans
  • Needing extra cash flow
  • Looking or more flexible repayment options, such as making extra repayments
  • Altering your loan repayment term (extending or decreasing)
  • Improving your loan terms

How much equity can you access?

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How does refinancing a home loan work?

If you’ve decided that it’s time to refinance your home loan, here are the initial steps you can take:

  1. Do some research and find out what kind of interest rates and home loans are out there.
  2. If your primary motivation for refinancing is to get a lower interest rate, make sure you contact your existing lender first to see if you can negotiate a better rate.
  3. If your current lender is offering better rates to new customers, ask them to pass on these rates.
  4. Consider switching lenders if they refuse to lower your rate or you find better rates elsewhere. You can use Lendi’s interest rate comparison tools to see if you can find a better deal:

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Refinancing a fixed rate home loan

It will be more difficult to negotiate a lower interest rate if you are a fixed interest borrower. When you sign onto a home loan with a fixed interest rate, you are guaranteeing that same rate for an agreed upon ‘fixed’ period usually between 1 and 5 years.

So, if you refinance during this fixed period, you are essentially ‘breaking’ your loan. This means that you can be charged break fees for switching home loans. Before you make the switch, get in touch with your lender to find out whether you’ll be charged break costs, how much you can expect to pay and whether there’s an alternative way to get what you want without ‘breaking’ your loan.

Refinancing a variable rate home loan

Homeowners with a variable interest rate are offered a lot more flexibility. Of course, the downside is that your interest rate can fluctuate with the market but can be advantageous or the opposite.

Once you’ve compared your current home loan with other loans available on the market, you can refinance entirely through our online platform. You’ll be asked to provide some information about your needs and preferences, and then you can apply for your chosen home loan online.

If you have any questions throughout the process, our Home Loan Specialists are on hand to help. Read our guide to refinancing for more information on what you can expect.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: interest rate, home loan, refinance, lender, credit score, first home buyer, fixed interest, variable interest

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. Lendi's board is majority independent and non-executive.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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