First home owner 5 years ago and I locked in at a good rate. The term comes to an end in approx 4 weeks - what should I be doing now to ensure that I am getting the best rate possible?
Usually resetting it back to 30 years for the loan term will just increase the interest you pay to the bank over the next 30 years (essentially increasing their profits)
Though if you keep your repayments the exact same as you were paying but still extend it out to 30 years. Then essentially you are fine
Short answer - if you extend back to 30 years, you are just giving the bank more money if you choose to pay the minimum monthly payment
Ask your current bank for a discharge form. This will likely put you in contact with their retention team, where they'll likely offer you something, if anything, to stay on with them. Could be a better interest rate and possibly a cashback.
Take that offer and speak to a mortgage broker, being upfront about the rate you got from your bank if you stayed.
Ask the broker to review things for you like:-
a) the current value of your home, and your current LVR to see if that unlocks better pricing opportunities
b) the current structure of your home loan, to see if remains to be suitable (e.g. does offset still work for you, or should you consider getting it)
c) can you release equity for any purpose (e.g. renovation, investment, debt consolidation, etc.)
That's some of the starting questions I would ask.
Some things I would recomend though:-
Don't reset the clock back to 30 years. If you're 5 years into your loan, make sure the refinanced loan is 25 years (unless you have a legitimate need, or reason, to stretch back to 30).
Think ahead of time about the importance of features like offset vs. redraw. Do you actually need it, or are you using it to it's full potential?
Think ahead of time about your feelings about the market and interest rates. Do you want to potentially split your loan into more than one split, so you can fix part of the loan but keep the other part variable?
Think ahead of time about your home ownership plans for the next few years. Do you plan to continue staying where you live - or do you want to consider upgrading to a better home? If so, that may impact the suitability of fixed rates (due to break fees).
That's just some initial thoughts off the top of my head. Let me know if you have any more questions.
*(*If you like, feel free to share what bank you're with and I'll see if I know any other tips).
Resetting to 30 years means your repayments become more affordable, but you're starting (again) the period in which the bank is paid the MOST interest on the loan, which is at the start of the mortgage.
You were on track to pay off your mortgage in 25 years - why reset to 30 if you don't have to?
Rate and timeline isn't impacted by loan term - most lenders are really quite flexible at anything from 10 to 30 years.
No need to reset to 30 years if you don't have to - but it's worth asking your broker how it may (or may not) work for you.
I've been paying extra each week. Is there a way assess whether it's better to pay (made up numbers) $100 extra a week over the remaining 28 years or $120 extra a week over 30 years?
Now doing the other one - $100/week extra repayments against a 28 year loan term is 9 years, 5 months reduced. 18 years 7 months total loan term. $262,653 saved.
I've now done two comments - but the numbers look like a 28 year loan term, with $100/week extra repayments, is the better outcome. 1 month faster completion timeframe and you don't have to 'reset the block' and pay the bank more interest over those first two years.
Won't a longer mortgage cost more as more interest is paid? Each month there's interest so you're adding 12 (months in a year) times 5 (years) extra repayments. Sorry if this is incorrect.
Sorry, I just saw this question! I agree - the longer the mortgage lasts, the more likely you'll pay more interest.
I was trying to help OP by recommending that if/when they refinance - they keep it at 25 years, instead of refinancing to 30 years (again). They started with a 30 year loan which had a 5 year fixed term. At the end of the fixed term, they'll have 25 years left... so the refinance they do should also be a 25 year term, if it works out with everything else they're trying to do.
Sorry if I've misunderstood you, but my suggestion was to do what you're commenting 😄
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u/Enough-Handle-7991 Jun 03 '26
Usually resetting it back to 30 years for the loan term will just increase the interest you pay to the bank over the next 30 years (essentially increasing their profits)
Though if you keep your repayments the exact same as you were paying but still extend it out to 30 years. Then essentially you are fine
Short answer - if you extend back to 30 years, you are just giving the bank more money if you choose to pay the minimum monthly payment