As a current or former Australian Defence Force member, your financial situation is unique. Your service record, career progression, and deployment history can actually work in your favour when it comes to accessing loan options from banks and lenders across Australia. If you're feeling locked into your current home loan or want more control over your finances, refinancing could be the key to improving your loan flexibility.
Why refinance for more flexibility?
Many Defence Force members find themselves in situations where their original home loan no longer fits their needs. Perhaps your fixed rate period ending has left you with higher repayments, or your financial situation has improved and you want to release equity to buy the next property. Refinancing isn't just about accessing a lower interest rate – it's about finding loan options that adapt to your lifestyle.
Here are some common reasons Defence personnel consider refinancing:
• Change your loan term to match your career plans or retirement goals
• Consolidate debts into one manageable payment
• Reduce loan repayments to free up cash flow for other investments
• Releasing equity in your property for renovations, investments, or major purchases
• Access more flexible features like offset accounts or redraw facilities
Understanding your rate options
When exploring refinance interest rates, you'll typically encounter two main types:
Variable interest rate loans offer flexibility to make extra repayments and often come with features like offset accounts. The interest rate can fluctuate with market conditions, which means your repayments might change over time.
Fixed interest rate loans provide certainty with locked-in rates for a set period, usually between one to five years. This can help with budgeting, especially if you're planning around deployment schedules or career transitions.
Many Defence members opt for a split loan, combining both variable and fixed portions to balance flexibility with certainty.
Special considerations for Defence Force members
Your military service opens doors to unique lending opportunities. Many lenders recognise the stable employment that comes with Defence Force careers and offer preferential terms. When you work with specialists like Defence Loans, you can check eligibility for special lender policies designed specifically for military personnel.
These policies might include:
• Waived lenders mortgage insurance in certain circumstances
• Higher borrowing capacities based on your service record
• Streamlined application process that understands military pay structures
• Consideration of allowances and deployment income
The refinancing process
Starting with a home loan health check can reveal opportunities you might not have considered. This involves reviewing your current loan terms, interest rate, and features against what's currently available in the market.
The application process typically requires:
• Recent banks statements (usually three months)
• Pay slips or military pay statements
• Details of your current loan amount and property value
• Information about your financial situation and goals
Working with a broker who understands Defence Force pay structures can make this process much smoother. They know which lenders are most likely to approve your application and can present your application in the most favourable light.
Timing your refinance
There's rarely a 'perfect' time to refinance, but certain situations make it more beneficial:
• When your current interest rate is significantly higher than market rates
• If your property value has increased substantially since purchase
• Before or after a posting that might affect your income
• When you need to access equity for investment or other purposes
• If your current loan lacks the features you now need
Making the most of your equity
For many Defence members, their home represents their largest asset. Refinancing can help you make this asset work harder by releasing equity for strategic purposes. Whether you're looking to build an investment portfolio, fund your children's education, or prepare for post-military careers, accessing your property's equity through refinancing can provide the capital you need.
Reducing your loan repayments
If your goal is to reduce loan repayments, refinancing offers several pathways. You might secure a lower interest rate, extend your loan term, or consolidate higher-interest debts into your mortgage. Each option has different implications for your long-term financial position, so it's worth discussing your goals with a specialist who understands military finances.
Refinancing to improve loan flexibility isn't just about finding a lower rate – it's about creating a loan structure that supports your unique lifestyle and career path. With the right approach, you can potentially access a lower interest rate while gaining features and flexibility that make managing your finances more convenient.
Call one of our team or book an appointment at a time that works for you to discuss how refinancing could improve your loan flexibility and support your financial goals.
