Mistakes to avoid when Refinancing
your Home Loan

Estimated read time: 2 Minutes

Refinancing your home loan is a big decision. This article covers some of the key mistakes to avoid when refinancing, to help guide you towards a more well-informed decision.

Mistake #1: Focusing only on the dollar savings

The overall cost of refinancing is an important consideration when deciding whether to switch lenders.

When refinancing your home loan, it’s possible that your cashflow may improve monthly, but what can often be overlooked is that the total cost of the loan may be higher due to a longer loan term, for example, or the fees involved in switching your home loan.

By calculating the long-term costs involved, you can make a more informed decision about whether refinancing is a good idea for you.

Mistake #2: Not checking your credit report

If you’re looking to refinance your home loan, then it’s important to understand how a lender may use your credit score to assess your application. Keeping an eye on your credit report and taking proactive steps to improve your credit score, could increase your chances of securing more favourable loan terms.

Mistake #3: Thinking short-term

When refinancing, it's important to consider your long-term financial stability. Have a think whether the new terms extend the length of the home loan too far or increase your monthly repayments beyond your comfort level. Carefully evaluating these factors can help you make the right decision for your situation and avoid financial hardship down the track.

Mistake #4: Not looking at the bigger picture

Before looking to refinance, it could be a good idea to clarify your financial goals. Consider factors like your current situation, future career aspirations or plans to move, and any potential changes around your income or job security. This will help you decide if refinancing is the right decision for you at this moment in time.

Mistake #5: Taking the first offer

Take the time to compare interest rates, fees, and loan terms from different lenders. Reviewing your options could lead to increased savings, lower fees or increased flexibility in some circumstances – so it could be worth shopping around.

Mistake #6: Doing it all yourself

The refinancing process can be a bit confusing. With so many lenders to choose from and so many different types of home loans available – you may decide to get help from a mortgage broker when looking for the right home loan. Their expertise can help you understand the full range of home loan options available to suit your individual situation.

Looking to refinance your home loan? We're here to help.

Want your home loan to work harder for you? There could be an opportunity to improve your financial situation by switching products or lenders, you might want to think about refinancing. Our video answers the key questions around the process of refinancing.

Our team of lending specialists are here to help you understand your options when refinancing your home loan to Pepper Money. Simply give us a call on 137 377, or get started by trying our online borrowing power calculator.

Contributor | Barry Saoud, General Manager, Mortgages and Commercial Lending

Barry joined Pepper Money in July 2021 as General Manager, Mortgages and Commercial Lending. He is responsible for the strategic direction and operating performance across product, credit, and settlements for mortgages, commercial loans, personal loans, and direct sales. Read more.

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Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.

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Mistakes to avoid when Refinancing
your Home Loan

Mistake #1: Focusing only on the dollar savings