Your mortgage doesn't have to stay the same forever. If you're a current or former ADF member feeling the pinch from monthly repayments, refinancing could help reduce your loan repayments and put more money back in your pocket each month.
Understanding Refinancing for ADF Members
Refinancing means switching your existing home loan to a new one, often with different terms or a lower interest rate. For Defence Force members, this process can be particularly beneficial due to special lender policies available exclusively to ADF personnel.
When you refinance, you're essentially paying off your current loan with a new one. This gives you the opportunity to:
• Access loan options from banks and lenders across Australia
• Secure a lower variable interest rate or fixed interest rate
• Change your loan term to reduce monthly payments
• Consolidate debts into one manageable payment
• Release equity to buy the next property
When Should You Consider Refinancing?
Several situations make refinancing worth exploring:
Fixed Rate Period Ending: If your fixed rate period is coming to an end, you might face higher repayments. Refinancing can help you secure another favourable rate.
Changed Financial Situation: Whether you've received a promotion, started a family, or your expenses have increased, refinancing can adjust your repayments to match your current circumstances.
Higher Interest Rates: If you're paying more than current market rates, accessing a lower interest rate through refinancing could save you thousands annually.
Debt Consolidation: Combining multiple debts into your mortgage can reduce your overall monthly commitments.
How Refinancing Reduces Monthly Payments
There are several ways refinancing can lower your monthly repayments:
- Lower Interest Rates: Even a 0.5% reduction in your interest rate can significantly impact your monthly payments
- Extended Loan Terms: Stretching your loan over a longer period reduces monthly amounts (though you'll pay more interest overall)
- Debt Consolidation: Rolling high-interest debts like credit cards into your mortgage at a lower rate
- Accessing Better Loan Products: Finance & Mortgage Brokers can help you find better loan options suited to your specific needs
The Application Process for ADF Members
Refinancing doesn't have to be overwhelming. Here's what typically happens:
Documentation Required:
• Recent bank statements (usually 3-6 months)
• Proof of income and employment
• Details of your current loan amount
• Information about your property value
Assessment: Lenders will evaluate your financial situation, including your income, expenses, and credit history.
Special Considerations: ADF members often have access to exclusive products and may be eligible for special lender policies that aren't available to civilian borrowers.
Releasing Equity in Your Property
If your property has increased in value since you bought it, refinancing can help you access this equity. This released equity can be used for:
• Home improvements
• Investment opportunities
• Debt consolidation
• Purchasing additional property
Fixed vs Variable Interest Rates
When refinancing, you'll need to choose between fixed and variable rates:
Variable Interest Rate: Your repayments can go up or down with market changes. This offers flexibility but less certainty.
Fixed Interest Rate: Your rate stays the same for a set period, providing predictable repayments but less flexibility.
Many ADF members benefit from a combination of both, splitting their loan between fixed and variable portions.
Working with Specialist Defence Brokers
Finance & Mortgage Brokers who specialise in Defence lending understand the unique aspects of military life. They can:
• Check eligibility for special lender policies exclusive to ADF members
• Provide a streamlined application process
• Access loan options from banks and lenders across Australia
• Help you understand how deployment, postings, and military allowances affect your application
Making the Decision
Before refinancing, consider:
• Current refinance interest rates compared to your existing rate
• Exit fees from your current lender
• Application fees for the new loan
• How long you plan to stay in your current property
• Your long-term financial goals
Remember, the lowest rate isn't always the right choice. Features, flexibility, and ongoing fees all matter.
Refinancing can be a powerful tool for reducing your monthly repayments and improving your financial position. For ADF members, specialist brokers who understand military life can make the process smoother and help you access exclusive benefits.
Call one of our team or book an appointment at a time that works for you to explore how refinancing could reduce your monthly payments and improve your financial wellbeing.
