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Your Local Brokers Baseline Finance
Refinancing a loan can bring meaningful advantages — but it also comes with a bit of legwork that many people simply can’t be bothered with. This article explores whether it’s worth the effort by weighing up the key pros and cons of refinancing.
By refinancing your loan, you’ll almost certainly secure a lower interest rate. It’s an opportunity to test the market and find the best fit for your circumstances. You may also achieve a similar result by asking your current lender to review your rates. Unfortunately, some lenders only take these requests seriously once you’re prepared to move elsewhere.
Rolling multiple debts (e.g. credit cards or personal loans) into one facility simplifies management and can reduce total interest paid. Care should be taken, however, to avoid extending the average loan term unnecessarily, as this could increase total interest costs over the life of the loan.
Extending your loan term or securing a lower rate can reduce your monthly outgoings and free up cash flow — a welcome relief if things are tight. That said, we’re advocates of reducing unproductive debt, so it’s wise to maintain or even increase repayments when cash flow allows.
If your property value has risen, refinancing can help you draw out equity for renovations, investments, or consolidating other debts.
Revisiting your finance arrangements gives you the chance to reassess how your loan is structured, rather than sticking with what you have. With fresh eyes (and the right guidance), you may be able to achieve a better outcome — whether that’s adjusting ownership, gaining flexibility, optimising tax benefits (with your accountant’s input), or adding features such as offset accounts.
There are unavoidable costs associated with refinancing. Mortgage registration fees are part of the process, while commercial loans may also involve establishment fees, valuation costs, and legal or documentation expenses. The potential benefits must outweigh these costs.
While technology has made the refinancing process easier than ever, it still requires effort. You’ll need to set aside time, ensure your financial and tax returns are up to date, and gather supporting documents.
Just because you can borrow more doesn’t mean you should. Accessing extra funds can be tempting, but remember — it all needs to be paid back, with interest that compounds over time.
Refinancing can be a smart financial move — particularly if it lowers your rate, simplifies your debt, or helps you unlock equity for productive purposes. However, it’s not always worth the effort or cost. The key is to weigh the short-term inconvenience against the long-term financial gain. For many, the right broker can make the process smoother, ensuring the numbers — and the strategy — stack up before taking the plunge
The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
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