How many times can I refinance my loan?

Understanding the Benefits and Limits of Mortgage Refinancing

Refinancing a mortgage can provide homeowners with many benefits, such as reducing their monthly payments, obtaining a better interest rate, or cashing out equity in their property. However, many people wonder how many times they can refinance their mortgage.

How Often Can You Refinance?

The short answer is that there is no limit to how many times you can refinance your mortgage. As long as you have sufficient equity in your property, meet the lender’s qualifications, and are willing to pay the associated fees and costs, you can refinance your mortgage as often as you want.

Considering the Downsides of Frequent Refinancing

However, it is important to keep in mind that refinancing too frequently can have downsides. Each time you refinance, you will incur closing costs, which can add up to thousands of dollars. Some banks offer cash back bonuses to help cover these costs, but it’s important to make sure that the ongoing interest savings and any upfront cash back benefits outweigh the cost to leave your existing bank. A good mortgage broker will be able to analyse this for you.

Evaluating the Costs and Benefits

• Closing Costs: These costs can be significant and should be weighed against potential savings.
• Cash Back Bonuses: Some banks offer bonuses to help cover costs, but it’s crucial to ensure that benefits outweigh the costs.
• Interest Savings: Analyse if the ongoing interest savings justify the refinancing.

Staying vs. Switching: Assessing Your Options

In many cases, your existing bank may even offer you a discounted rate to stay, which can save you the disruption of having to move your financial life over to a new financial institution.

Generally speaking, as your property grows in value and your loan reduces in balance, banks will offer better rate discounts associated with your increased equity. You may also find that a change in purpose or structure, ie, changing from ‘Investment’ to ‘Owner Occupied’, or ‘Interest only’ to ‘Principal and interest’ repayments may also provide access to cheaper rates.

Factors Influencing Rates:

1. Property Value Growth: Banks may offer better rates as your property value increases.
2. Loan Balance Reduction: A decreased loan balance can lead to better rate discounts.
3. Change in Loan Purpose or Structure: Switching from ‘Investment’ to ‘Owner Occupied’ or ‘Interest Only’ to ‘Principal and Interest’ may offer cheaper rates.

Of course rates and fees are very high on the list of considerations, but when selecting a loan product it’s also very important to consider things like your lifestyle, spending habits, home cash flow management strategy and ongoing wealth creation strategy. Setting up the right loan product can make a huge difference when it comes to cash flow, debt reduction, tax, and future borrowing power.

When selecting a loan product, it’s essential to consider your lifestyle, spending habits, home cash flow management strategy, and ongoing wealth creation strategy.

Key Considerations:

• Cash Flow
• Debt Reduction
• Tax Implications
• Future Borrowing Power

The Dynamic Nature of Banking and Property Markets

The reality is, the banking world and the property market are in a constant state of change, and if you’re like most people, your goals and financial position are also likely to change over time. For this reason, we recommend conducting a loan review with your mortgage broker at least every 2 years, or sooner if you experience a significant change to your home loan, your financial position, or your ongoing financial goals.

In Conclusion: The Importance of Periodic Review

In conclusion, there is no set limit to how many times you can refinance your mortgage, but not reviewing your home loan product periodically can cost you money in the long run. Refinancing may not be the best option for you right now, but it costs nothing to reach out to your mortgage broker to review your current lending, compare the market and see if there are savings for you to take advantage of.

Luke Meisenhelter

With over 14 years in the finance industry Luke has helped countless clients achieve their finance goals. As the Managing director and founder of Loanright Financial services Luke now manages a team of experienced mortgage brokers with a combined total of more than 60 years finance experience in residential and commercial lending as well as business and asset finance. As a leader the finance industry Luke has become an innovator in the game, mentoring and coaching other industry professionals and pushing the limits on process driven workflow structures, systems, and accountabilities, aimed at providing the best possible financial outcomes for all clients in the shortest possible time frames. Throughout his years in the finance industry, Luke has become increasingly frustrated with the quality of information available to consumers in the property and finance market, most of which is biased and designed to capture leads by creating fear and offering a magic solution. It’s Luke’s goal to share his knowledge and provide free, non-biased, quality sources of information on finance and financial concepts to as many Australians as possible.