Top 5 Ways Refinancing Can Change Your Loan Term & Save Money

Why Defence Force Members Should Consider Refinancing

As a current or former Australian Defence Force member, your financial situation is unique. Whether you're dealing with postings, deployment allowances, or transitioning to civilian life, refinancing your home loan can offer significant advantages - particularly when it comes to adjusting your loan term.

Refinancing allows you to access loan options from banks and lenders across Australia, potentially securing more favourable terms than your current arrangement. Let's explore how changing your loan term through refinancing can transform your financial position.

Understanding Loan Term Changes in Refinancing

When you refinance, you're essentially replacing your existing home loan with a new one. This process gives you the opportunity to change your loan term - the period over which you'll repay your mortgage. You might extend your loan term to reduce loan repayments, or shorten it to pay off your mortgage sooner and save on interest costs.

5 Key Benefits of Changing Your Loan Term

1. Reduce Monthly Repayments
   Extending your loan term spreads your loan amount over more years, which typically results in lower monthly repayments. This can be particularly helpful if your financial situation has changed or you need more breathing room in your budget.

2. Pay Off Your Mortgage Sooner
   Shortening your loan term means higher repayments but significant interest savings over time. If your income has increased through promotions or you've transitioned to a well-paying civilian role, this could save you thousands.

3. Take Advantage of Rate Changes
   If your fixed rate period ending coincides with high interest rates, refinancing with a new loan term might help you secure a variable interest rate or new fixed interest rate that works in your favour.

4. Release Equity for Investment
   Adjusting your loan term while releasing equity in your property can help you release equity to buy the next property or make other investments. This strategy is popular among Defence members looking to build wealth.

5. Consolidate Debts
   A longer loan term combined with debt consolidation can help you consolidate debts into one manageable payment, often at a lower interest rate than credit cards or personal loans.

When Should You Consider Refinancing?

Several scenarios make refinancing particularly attractive:

• Your current interest rate seems high compared to current market rates
• You need to release equity for a major purchase or investment
• Your repayments are straining your budget
• You want to consolidate high-interest debts
• Your fixed rate period is ending and you want to explore other options

The Application Process for Defence Members

Defence Loans understands the unique circumstances facing ADF members. We can help you check eligibility for special lender policies that recognise Defence income, allowances, and employment stability. The application process typically involves:

• Reviewing your current loan and financial situation
• Gathering required documentation, including bank statements
• Comparing refinance interest rates across multiple lenders
• Submitting your application through our streamlined application process
• Settlement of your new loan

Getting Your Home Loan Health Check

Before making any decisions, it's worth conducting a home loan health check. This involves reviewing your current loan performance, comparing it with available market options, and identifying opportunities to potentially access a lower interest rate or more suitable loan terms.

Consider factors like:

• Your current interest rate versus market rates
• Remaining loan term and monthly repayments
• Any upcoming rate changes (particularly if you're on a fixed rate)
• Your equity position and future financial goals
• Whether you could benefit from accessing better loan options

Making the Right Choice for Your Situation

Every Defence member's financial situation is different. What works for a young officer looking to buy their first investment property might not suit a senior NCO approaching retirement. That's why it's crucial to speak with specialists who understand both the mortgage market and Defence-specific circumstances.

When you work with experienced brokers, you can access loan options from banks and lenders across Australia, ensuring you're not limited to just one or two products. This comprehensive approach often reveals opportunities you might not have discovered on your own.

The key is matching your refinancing strategy to your long-term financial goals while taking advantage of your current circumstances and any special policies available to Defence personnel.

Refinancing with a loan term change isn't just about getting a lower rate - it's about creating a mortgage structure that supports your financial objectives and lifestyle. Whether you're looking to reduce repayments, pay off debt faster, or release equity for your next venture, the right refinancing strategy can make a significant difference to your financial future.

Call one of our team or book an appointment at a time that works for you. Our specialists understand the unique needs of Defence personnel and can help you explore refinancing options that align with your goals and circumstances.