As an Australian Defence Force member, you've dedicated your career to serving our country. Your financial decisions, particularly around your home loan, deserve the same strategic approach you bring to your service. Knowing when to refinance your home loan can save you thousands of dollars and open doors to new financial opportunities.
Understanding Refinancing for Defence Force Members
Refinancing involves switching your existing home loan to a new loan, either with your current lender or a different one. This process allows you to access loan options from banks and lenders across Australia, potentially securing more favourable terms that align with your current financial situation.
As Defence Force members, you often have access to specialised lending products and policies that civilian borrowers don't. Working with finance & mortgage brokers who understand the military lifestyle can help you check eligibility for special lender policies designed specifically for serving and former ADF members.
Key Indicators It's Time to Consider Refinancing
Your Fixed Rate Period Ending
One of the most common triggers for refinancing occurs when your fixed rate period ending approaches. If your loan is about to revert to a variable interest rate that's higher than current market offerings, it's worth exploring your options. Many lenders offer promotional rates for new customers that could reduce your ongoing repayments.
Interest Rate Changes
When market conditions shift and you notice you're paying above current market rates, accessing a lower interest rate through refinancing can lead to substantial savings. Even a reduction of 0.5% on your interest rate can save you thousands over the life of your loan.
Changes in Your Financial Situation
Your military career brings unique circumstances that might warrant refinancing:
• Promotion or rank advancement increasing your income
• Posting allowances or location-based benefits
• Transition from active service to civilian employment
• Changes in family circumstances or dependents
Property Value Increases
If your property has increased in value since you purchased it, you might be sitting on untapped equity. Releasing equity in your property can provide funds for various purposes, from home improvements to investment opportunities.
Strategic Reasons to Refinance
Debt Consolidation
Many Defence Force members find value in using refinancing to consolidate debts. By rolling credit card debt, personal loans, or other high-interest borrowings into your home loan, you can reduce loan repayments and simplify your financial management.
Changing Your Loan Structure
Refinancing allows you to change your loan term, which can either:
• Reduce your loan term to pay off your mortgage sooner
• Extend your loan term to lower monthly repayments
• Switch between variable interest rate and fixed interest rate options
Property Investment Opportunities
For those looking to build their property portfolio, refinancing can release equity to buy the next property. This strategy is particularly relevant for Defence Force members who understand the value of long-term financial security.
The Application Process for Defence Force Members
When you decide to refinance, the application process typically involves providing recent bank statements, pay slips, and documentation of your military service. Defence Force members often benefit from a more streamlined application process due to the stable nature of military employment.
Lenders recognise that ADF members have secure employment and consistent income, which can work in your favour during the approval process. Your military service record demonstrates reliability and commitment – qualities that lenders value.
Evaluating Your Current Loan
Before making the switch, assess your current loan amount against what you could achieve with refinance interest rates available in the market. Consider:
• What you're currently paying in interest and fees
• Whether you're on a variable or fixed rate
• How much equity you've built in your property
• Your remaining loan term
Costs to Consider
While refinancing can offer significant benefits, factor in the associated costs:
• Discharge fees from your current lender
• Application fees for your new loan
• Valuation fees
• Legal costs
• Mortgage registration fees
These costs typically range from $1,000 to $3,000, but the long-term savings often outweigh these upfront expenses.
Making the Right Choice
Refinancing isn't always the right move for everyone. The decision depends on your individual financial situation, how long you plan to stay in your current property, and your long-term financial goals. As a Defence Force member, you have access to better loan options through specialist lenders who understand military life and can offer products tailored to your needs.
Timing is crucial – if you're planning to pay off your loan within the next few years, or if you're likely to be posted interstate soon, the costs of refinancing might outweigh the benefits.
Your home loan is likely your largest financial commitment, and ensuring it works in your favour is essential for your long-term financial wellbeing. Whether you're looking to reduce repayments, access equity, or consolidate debt, the right refinancing strategy can put you in a stronger financial position.
Call one of our team or book an appointment at a time that works for you to discuss your refinancing options and discover how we can help you make the most of your military service benefits.
