Reviewing or refinancing.

It’s when you get a completely new home loan with a new lender and use it to repay your current home loan in full. If you just want to change the way your loan is set up with your current lender, that’s known as restructuring.

Most people refinance because their circumstances have changed or to save money. Or they’ve discovered another lender that offers a better deal.

Most people who refinance do it to save money, despite the costs involved. The savings are typically due to a lower interest rate, a new customer cashback incentive or a home loan set up that works better for them. If your loan balance is now less than 80% of your property’s value, you may want to increase your loan again to create a cash lump sum.

The cost to refinance with another lender will depend on your situation. If you’re breaking a fixed interest rate agreement you may be charged an early repayment penalty or break fee to cover the lender’s losses. If you accepted a new customer incentive you might have to repay it if the clawback period still applies. You should also allow for your lawyer’s fee, a mortgage discharge fee, a valuation of your property for the new lender and any loan establishment fees they might charge.

The short answer is: when refinancing won’t help you meet your immediate needs or longer term goals. That often means when the refinancing costs outweigh the benefits. If you have one or more loans on a fixed interest rate, chances are you’ll have to pay a break fee. But it could still be worth refinancing with a new lender. A good mortgage adviser can help to clarify the gains.

Many mortgage advisers recommend an annual review. The idea is to check whether your financial situation and goals are still the same, and whether you still have the best interest rates and loan structure for your needs. Even if they’re not ideal, you may just need to restructure your loan with your current lender, rather than refinancing with a new one. The point is, it pays to check regularly and plan ahead.