If you are thinking of joining the thousands of Australians who are refinancing loans, there are some important issues to consider.

Reasons to consider refinancing:

· Seeking a better interest rate on your mortgage.
· Creating greater flexibility in your mortgage – interest-only repayments, credit cards, redraw, better service, lower fees, paying off your mortgage earlier.
· Using the equity in your home to finance renovations, or cash for other investments or business capital.
· Consolidating high interest debt such as credit and store cards, and personal loans into a lower interest loan such as a mortgage.

Things to consider when refinancing:

· Costs associated with refinancing – for example, early discharge fees if you are in a fixed interest arrangement, application fees on new loans, mortgage insurance, stamp duty (in some states) and so on. You need to work out whether these costs outweigh the saving in interest you’ll make, or how long it will take to recoup them. For example, if you are planning to sell soon, refinancing may not be the right option for you.
· Consider using a mortgage broker – they can save you time and effort by matching you with the best loan options. Brokers are paid a commission by the lender – it doesn’t cost you. Many people are concerned that advice may be swayed by the level of commissions, however independent brokers are paid a standard commission with little variation between the lenders.

Refinancing can be a considerable effort – though it should be less so if you use a broker – but at the end of the day, if your calculations show you can save money, then it’s a worthwhile exercise.

Tiffany Boys - http://www.mortgage-refinance.com.au

Tiffany is a director of Crest Simplify Pty Ltd and lives and works in Sydney, Australia.

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