Smart ways to refinance and change your payment schedule

When considering refinancing your home loan, most Glen Iris homeowners focus on securing a potentially better interest rate. However, one often overlooked aspect is the opportunity to change your repayment frequency, which can significantly impact your financial situation and loan term.

Understanding Payment Frequency Options

Refinancing opens doors to various repayment structures that may not have been available with your original lender. When you access loan options from banks and lenders across Australia, you'll discover several payment frequency choices:

• Weekly repayments - 52 payments per year
• Fortnightly repayments - 26 payments per year
• Monthly repayments - 12 payments per year
• Bi-monthly repayments - 6 payments per year

Each option affects your loan amount differently over time, with more frequent payments typically reducing the total interest paid.

How Payment Frequency Affects Your Loan

The mathematics behind payment frequency can work in your favour. When you make fortnightly repayments instead of monthly ones, you're essentially making 13 monthly payments per year rather than 12. This additional payment goes directly toward reducing your principal balance.

For a $500,000 loan with a variable interest rate of 6% over 30 years:
• Monthly payments: approximately $2,997
• Fortnightly payments: approximately $1,498 (totalling $38,948 annually)

This approach can reduce your loan term by several years and save tens of thousands in interest payments.

Refinancing Considerations for Glen Iris Residents

When your fixed rate period is ending, it's an ideal time to review your entire loan structure. The application process for refinancing allows you to reassess your financial situation and potentially:

1. Reduce loan repayments by extending the loan term
2. Consolidate debts into your mortgage at a lower interest rate
3. Release equity to buy the next property through a streamlined application process
4. Change your loan term to align with your current financial goals

Accessing Lower Interest Rates Through Refinancing

A comprehensive home loan health check reveals opportunities to access better loan options. Different lenders offer varying refinance interest rates, and some provide special lender policies that weren't previously available. Your mortgage broker can check eligibility for these exclusive offerings.

Whether you prefer a fixed interest rate for predictability or a variable interest rate for flexibility, combining rate improvements with optimised payment frequency maximises your refinancing benefits.

The Application Process and Documentation

Refinancing requires current documentation, including recent bank statements and income verification. Lenders assess your financial situation to determine suitable loan options. The process typically involves:

• Property valuation
• Credit assessment
• Income verification
• Analysis of existing debts
• Review of your preferred repayment structure

Releasing Equity in Your Property

Glen Iris property values have appreciated significantly, meaning many homeowners have substantial equity available. Refinancing can unlock this equity while simultaneously adjusting your payment frequency to manage cash flow effectively.

This strategy works particularly well for:
• Investment property purchases
• Home renovations
• Debt consolidation
• Education expenses

Making Informed Decisions

Every financial situation is unique, and what works for one borrower may not suit another. Consider factors such as:

• Your current cash flow requirements
• Long-term financial objectives
• Job security and income stability
• Other investment opportunities
• Family circumstances and future plans

Refinancing provides the opportunity to realign your mortgage with your current priorities while potentially accessing a lower interest rate and more favourable loan terms.

Choosing the right payment frequency when refinancing can accelerate your journey to mortgage freedom while improving your monthly cash flow management. AXTON Finance specialises in helping Glen Iris residents evaluate these options and find solutions that match their unique circumstances.

Call one of our team or book an appointment at a time that works for you to discuss how refinancing with adjusted payment frequencies could benefit your financial position.