Refinancing a mortgage means paying off your current loan and replacing it with a new one. There are many reasons why homeowners choose to refinance: to obtain a lower interest rate; to pay off the loan faster with a shorter term; to convert from a fixed-rate mortgage to an adjustable-rate mortgage, or vice-versa; to finance a large purchase, or to consolidate debt.

In this article, I answer questions such as ‘What are the benefits of refinancing?’‘How do I refinance my mortgage?’ and more.

What are the Benefits of Refinancing?

One of the main benefits of refinancing, regardless of equity, is reducing your interest rate. Often, as people continue to make more money, they are able to pay all of their bills on time and thus increase their credit score. This increase results in the ability to acquire loans at lower rates, and therefore many people choose to refinance with their mortgage companies. A lower interest rate can have a significant effect on monthly payments, possibly saving you hundreds of dollars each year!

Second, most people choose to refinance so they can obtain money to reduce credit card debt or to make large purchases (i.e. cars). The way that most people do this is by refinancing with the intention of taking equity out of the home. How? First, the home is assessed. Second, the lender will determine how much of a percentage that assessment they are ready to loan. Lastly, the balance owed on the original mortgage will be subtracted. After that money is used to pay off the original mortgage, the remaining balance will be loaned to the homeowner.

How Do I Refinance My Mortgage?

If you find yourself asking, ‘How do I refinance my mortgage?’, the first thing that you should consider is exactly how you will pay off the loan.

For instance, if you are planning to use the home equity line of credit for home renovations to increase the value of your home, you may consider this increased revenue during the sale of the house to be the way in which you will pay off the loan. On the other hand, if you are planning to use the credit for something else (i.e. to purchase a new car or to pay down credit card debt), it is best to carefully think about how you will pay off the loan.

Refinancing can be an excellent financial move if it reduces the term of your loan, helps you build equity faster, or reduces your mortgage payment. When used carefully, refinancing can also be an important tool to bring your debt under control. However, before you refinance your mortgage, study your financial situation carefully and ask yourself: How much money will I save if I refinance? How long will I live in this house?

The Bottom Line

There are several ways to refinance your mortgage. Finding the right loan depends on your goals. You may want to switch from a fixed-rate mortgage to an adjustable-rate mortgage, or vice-versa. Or you may want to reduce the term of your loan.

Whatever your goal is for refinancing your mortgage, I can help you! As an experienced mortgage broker, I can help you understand your refinancing options and identify which solutions best suit your needs.


Will Bell Mortgage Broker is a mortgage and finance broker based in Melbourne specializing in residential home loans.  Will is all about the average Australian understanding just enough of the broader economy to take action on your own personal economy.  He is the host of the My Personal Economy Podcast which you can check out here.

Additionally, you can follow him on Facebook


Services we offer:

  • First Home Buyer Loans
  • Property Investment Loans
  • Mortgage Consultation
  • Loan Prequalification
  • Debt Consolidation
  • Refinancing
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